Buying Bonds Answers

Pierce wishes to purchase a municipal bond with a par value of $500 from Chattahoochee County, and he is trying to decide which broker he should employ to purchase the bond. Broker A charges a 3.1% commission on the market value of each bond sold. Broker B charges a flat $24 for each bond sold. If the bond has a market rate of 88.754, which broker will give Pierce the better deal, and by how much?

Which kind of bond pays interest which is exempt from tax?

Corporate bonds from Hyren Airlines are selling at 106.133, bonds from Xyx Motors are selling at 97.701, and bonds from Ergar Appliances are selling at 101.294. If all of the bonds mentioned have a par value of $1,000 apiece, how much will it cost George to purchase one from each corporation?

Corporate bonds from Dagofi Radar are selling at 88.354, bonds from Chambers Translation are selling at 112.894, and bonds from Essentia Inc. are selling at 96.262. If Roger wants to buy two bonds with a par value of $1,000 each from Dagofi Radar, five bonds with a par value of $500 each from Chambers Translation, and four bonds with a par value of $1,000 each from Essentia Inc., how much can he expect to spend?

Jim wants to start investing in bonds. He checks with two brokers to ask them for suggestions of bonds to buy. Broker J, who charges a commission of 3.6% of the market value of all bonds sold, recommends for Jim to buy three par value $500 bonds from the city of Danville, a par value $1,000 bond from Raxin Accounting, and two par value $1,000 bonds from United Rotators. Danville bonds are selling at 114.212, Raxin Accounting bonds are selling at 79.941, and United Rotators bonds are selling at 102.844. Broker K, who charges a fee of $28 for each bond sold, recommends that Jim buy five par value $500 bonds from Fort Bend County, a par value $1,000 bond from the U.S. Treasury, and two par value $500 bonds from Iwad Records. Fort Bend bonds are selling at 91.090, Treasury bonds are selling at 101.163, and Iwad Records bonds are selling at 107.252. Based on the current information, which broker’s bond package will cost Jim less money up front, and how much less will it cost him?

Rank the following kinds of bonds in order from least secure to most secure: Municipal, Corporate, Treasury

Daniel buys one bond each with a par value of $1,000 from Grath Oil, Ombor Medical Supplies, and Dwyn Horticulture. Grath Oil bonds are selling at 120.514, Ombor Medical Supplies bonds are selling at 90.773, and Dwyn Horticulture bonds are selling at 101.180. What is the total face value of Daniel’s bonds?

Your broker charges you 2.5% commission on the market value of bonds you buy or sell. If you wish to buy a par value $1,000 bond from Cuyahoga County with a market rate of 86.681, approximately how much will you owe your broker?

Bonds from the city of Tavel Gorge worth $1,000 each are selling at 110.611. If Sean wishes to purchase three such bonds, how much can he expect to pay?

What is a bond?

Which of the following kinds of bonds earn interest?I. Corporate bondsII. Bonds selling at a discountIII. Municipal bonds

Which statement or statements apply to a bond which is selling at a premium?I. The market value exceeds the par value.II. The selling rate is above 100.III. It is sold by corporations, not by the government.

Osceola County bonds worth $1,000 are selling at 88.391. What is the market price of one such bond?