Question
Company A issued a 5 year 4.5% coupon bond with a stated value (par) of $12,000,000 on September 30, 2019 when the market rate of
Company A issued a 5 year 4.5% coupon bond with a stated value (par) of $12,000,000 on September 30, 2019 when the market rate of interest (yield to maturity) was 3.75%. The bond pays interest semiannually.
1. What is the price of the bond?
2. Now assume the above bond was settled (purchased) on 12/31/2019.
a. What is the cash (dirty) price of the bond?
b. What is the ask (quote or clean) price of the bond?
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Integrated Audit Practice Case
Authors: David S. Kerr, Randal J. Elder, Alvin A. Arens
5th Edition
0912503351, 9780912503356
