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18. Given the information below, which bond(s) will be issued at a discount? Bond 1 Bond 2|Bond 3 Bond 4 Stated Rate of Return Market Rate of Return 7% 5% 7% 12% 10% 8% 12% 9%

18. Given the information below, which bond(s) will be issued at a discount? Bond 1 Bond 2|Bond 3 Bond 4 Stated Rate of Return Market Rate of Return 7% 5% 7% 12% 10% 8% 12% 9%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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(rounded to nearest dollar) A ten year bond issue with a face amount of $100,000 bears interest 16. $ at the rate of 5.0%. The current market rate of interest is 4.90%. Determine the issue price of this annual bond. 17. Bond X and Bond Y are both issued by the same company. Each of the bonds has a face value of $100,000 and each matures in 10 years. Bond X pays 8% interest while Bond Y pays 7% interest. The current market rate of interest is 7%. Which of the following is correct? Both bonds will sell for the same amount. а. b. Bond X will sell for more than Bond Y. с. Bond Y will sell for more than Bond X. Both bonds will sell at a premium. 18. Given the information below, which bond(s) will be d. issued at a discount? Bond 1 Bond 2| Bond 3 Bond 4 Stated Rate of Return 5% 7% 12% 10% Market Rate of Return 7% 8% 12% 9% 19. % BD Company issues 6%, 10-year bonds with a face amount of $1,000,000 on January 1, 20A for $1,000,000. Interest is paid semiannually on June 30 and December 31. What was the market interest rate for the bond issuance?
Transcribed Image Text:(rounded to nearest dollar) A ten year bond issue with a face amount of $100,000 bears interest 16. $ at the rate of 5.0%. The current market rate of interest is 4.90%. Determine the issue price of this annual bond. 17. Bond X and Bond Y are both issued by the same company. Each of the bonds has a face value of $100,000 and each matures in 10 years. Bond X pays 8% interest while Bond Y pays 7% interest. The current market rate of interest is 7%. Which of the following is correct? Both bonds will sell for the same amount. а. b. Bond X will sell for more than Bond Y. с. Bond Y will sell for more than Bond X. Both bonds will sell at a premium. 18. Given the information below, which bond(s) will be d. issued at a discount? Bond 1 Bond 2| Bond 3 Bond 4 Stated Rate of Return 5% 7% 12% 10% Market Rate of Return 7% 8% 12% 9% 19. % BD Company issues 6%, 10-year bonds with a face amount of $1,000,000 on January 1, 20A for $1,000,000. Interest is paid semiannually on June 30 and December 31. What was the market interest rate for the bond issuance?
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