A 1000 bond bearing coupons at annual rate 6.5%, payable semian- nually, and redeemable at 1050 is bought to yield a nominal rate of 8%. If the present value of the redemption amount is 210, what is the price to the nearest 10?

A 1000 bond bearing coupons at annual rate 6.5%, payable semian- nually, and redeemable at 1050 is bought to yield a nominal rate of 8%. If the present value of the redemption amount is 210, what is the price to the nearest 10?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 4MC

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Concept explainers

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.

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am. 233.

4.1.19 A 1000 bond bearing coupons at annual rate 6.5%, payable semian-
nually, and redeemable at 1050 is bought to yield a nominal rate of
8%. If the present value of the redemption amount is 210, what is
the price to the nearest 10?

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