Suppose a bond with no expiration date has a face value of $10,000 and annually pays a
Question:
Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $800. Compute and enter in the spaces provided in the accompanying table either the interest rate that the bond would yield to a bond buyer at each of the bond prices listed or the bond price at each of the interest yields shown. What generalization can be drawn from the completed table?
Bond Price Interest Yield, %
$ 8,000 ……………………………. ______
_______ …………………………… 8.9
$10,000 ……………………………. ______
$11,000 ……………………………. ______
_______ …………………………… 6.2
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Economics
ISBN: 978-0073375694
18th edition
Authors: Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn
Question Posted: