Frugala is pleased when Sylvester puts $2000 into 10-year state bonds and $3000 into 5-year AAA rated bonds in steady hardware, inc. He buys the four state bonds at a 5% coupon rate and the three steady hand bonds at a 6.5% rate. Sylvester also buys two $500 bonds from a high tech firm at 7%, due in three years, at a total discount of $50.
1. What is the maturity of each of the three bond groups Sylvester buys?
2. What are the coupon rates?
3. What are the par values?
4. Which of Sylvester’s new investments are municipal bonds?
5. Which ones are corporate bonds?
6. For which bond purchase did Sylvester probably consult Standard & Poor?
