Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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You are called in as a financial analyst to appraise the bonds of Ollie’s Walking Stick Stores. The $5,000 par
value bonds have a quoted annual interest rate of 8 percent, which is paid semiannually. The yield to
maturity on the bonds is 12 percent annual interest. There are 12 years to maturity.
a. Compute the price of the bonds based on semiannual analysis.
b. With 8 years to maturity, if yield to maturity goes down substantially to 6 percent, what will be
the new price of the bonds?
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