Suzie to the Rescue!! We do not understand this question. Can you help us? An investor purchases an 8% corporate bond at 93. The bond is scheduled to mature in 2028. What will the investor receive at maturity? A)$1,040 B)$1,000 C)$1,080 D)$930, plus 8% on the invested funds Explanation The investor will receive $1,040 at maturity. This amount comprises the principal repayment of $1,000 plus the final semiannual interest payment of $40. LO 3.a
Hello! I myself do not stress this when I am teaching about bonds. At maturity the owner of the bond receives par value. That is all I really say about it. It is true that when you own a bond the interest payments are paid every six months. The last interest payment is paid to the owner of the bond at maturity. That is what this question is trying to stress. Since the coupon rate is 8%, that means the semi-annual interest payment is $40. So at maturity the bondholder receives par value = $1,000 plus the last interest payment (last coupon) which in this case is $40 = $1,040. Great question!
Hi Suzie, Can you explain this question? Your customer sells 100 shares of Small Co., Inc., common stock at $50 per share. After six months, they close the short position at $40 per share. Small Co. does not pay a dividend. What is the total return? A) 15% B) 10% C) 25% D) 20%
This is a good one. Remember when you short a stock the profit is on the downside. Here you made money! You covered at $40 (paid $40 a share to return the stock to the b/d). You initially shorted the stock at $50 (sold shares you did not own, but had borrowed, basically creating $50 a share out of thin air). This gives you a $10 profit. $10 is 25% of $40. 😀
Great question. The thing about the series 7 is you can't take the exam without a firm sponsoring you to take it. Once you do get it, if you leave the firm, how long you have before you would have to retest (or whether or not you can enroll in the maintaining qualifications program) will depend upon how long you were actively licensed for. 2-5 years depending upon the situation.
