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If a $100,000, 8%, 10 year semi-annual bond is sold to yield 9%. Assuming no transaction costs the cash proceeds will be: a. less then
If a $100,000, 8%, 10 year semi-annual bond is sold to yield 9%. Assuming no transaction costs the cash proceeds will be:
a. less then the face value(answer) b. equal to face value c. greater then the face value d. more than $180,000 e. exactly $109,000
ANSWER: CHOICE A
Hi, I was wondering if anyone could help me on this question. I know the answer is choice "a" but I'm confused why it's less than face value. Here i thought the 8% was the stated value, and the 9% the market value hence why I thought the answer would be c.
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