Bond price
Not what you're looking for?
A company has outstanding bonds with a 6 year maturity, $1,000 par value and 7% coupon paid semiannually and those bonds sell at their par price. This same company has another bond with the same risk, maturity and par value but this second bond pays a 7% annual coupon. What is an estimate of the price of the annual coupon bond?
A. $994.18
B. $998.56
C. $1,002.26
D. $1,008.30
E. $1,015.89
Purchase this Solution
Solution Summary
The solution explains how to calculate the bond price.
Solution Preview
The semi annual bonds sell at par and so the effective yield is (1+3.5%)^-1 = ...
Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Introduction to Finance
This quiz test introductory finance topics.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.