# CMA Study Group

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## bond

• #### 1.  bond

Posted 14 days ago

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Syed Yousuf Jamal

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• #### 2.  RE: bond

Posted 14 days ago
Good morning, Syed,

I think A.  Use the annuity 5% for the interest as stated rate and the 4% as current market rate for the bond.
\$40,000 x 7.72173 = \$308,869.20
\$800,000 x .67556 = \$540,448.00

I hope this helps and is correct.

Rebecca

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Rebecca McNeely Wetzel
Accountant
Ormond Beach, Florida
USA
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• #### 3.  RE: bond

Posted 14 days ago
Actually, I don't understand because Young is issuing the bonds and would get \$800,000 at time of issuance (no?), and it pays out the interest (does not receive it).
I would be interested to know what you find out.  Thank you.

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Rebecca McNeely Wetzel
Accountant
Ormond Beach, Florida
USA
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• #### 4.  RE: bond

Posted 14 days ago
Face amount \$800,000 *0.6756 plus \$40,000 * 8.111 = to answer D, remember interest paid twice per year so divide 8%by 2

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Deon Denton
Accountant
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• #### 5.  RE: bond

Posted 13 days ago
how you calculate 0.6756 and  8.111, I know it is mention in question but what percentage is he taking.

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Syed Yousuf Jamal
None
Alexandria
Egypt
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• #### 6.  RE: bond

Posted 5 days ago
The bond was issued at Premium because the stated or coupon  rate is higher than market/prevailing/yield rate.Letter D is eliminated

• #### 7.  RE: bond

Posted 12 days ago
okay this bond is old at a premium since the market interest rate is lower than the coupon interest rate and therefore we need to discount all the cash flows proceed from the bond to lower rate.
1- face value is 800,000 will be multiplied by 0,67556 factor. = 540448
2- interest rate actually paid equal to 80000 divided by two since its paid semi-annually so 40000 * 1-(1/(1+.04 power 10) all divided .04 or by multiply it by 8.11090 factor will result in 324436 - thus, the amount porceed equal to 540448+324436 = 864884 which is answer C

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Mohamed Shamsaldin
Accountant
Dammam
Saudi Arabia
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