Question
a. A bond that matures in 8 years has a par value of $1,000 and an annual coupon payment of $70; its market interest rate
a. A bond that matures in 8 years has a par value of $1,000 and an annual coupon payment of $70; its market interest rate is 9%. What is its price?
b. A bond that matures in 12 years has a par value of $1,000 and an annual coupon rate of 10%; the market interest rate is 8%. What is its price?
c. Which of those two bonds is a discount bond, and which is a premium bond? Explain.
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Fundamentals Of Corporate Finance
Authors: Stephen A Ross, Randolph W Westerfield, Bradford D Jordan
7th Edition
0073134295, 9780073134291
