Question
7. Jane has been offered a seven-year newly-issued bond issued by Barone, Inc., at a price of $946.50. The bond has a coupon rate of
7. | Jane has been offered a seven-year newly-issued bond issued by Barone, Inc., at a price of $946.50. The bond has a coupon rate of 9 percent and pays the coupon semiannually. Similar bonds in the market will yield 10 percent today. Should she buy the bonds at the offered price? (Do not round intermediate computations. Round your final answer to the nearest dollar.) | |
| A) | Yes, the bond is worth more than $946.50. |
| B) | No, the bond is worth less than $946.50. |
| C) | No, matter how much the bond is worth now, avoid newly-issued bonds |
| D) | Yes, matter how much the bond is worth now, buy newly-issued bonds. |
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