9 percent cumulative premium is paid on a 20-year bond of a $1,000 par amount.The bond is now priced at $925. What would the bond's price be in five years if the yield to maturity is the same as it is now?a. $ 966.79b. $ 831.35c. $1,090.00d. $ 933.09e. $ 925.00

9 percent cumulative premium is paid on a 20-year bond of a $1,000 par amount.The bond is now priced at $925. What would the bond's price be in five years if the yield to maturity is the same as it is now?a. $ 966.79b. $ 831.35c. $1,090.00d. $ 933.09e. $ 925.00

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

76A 9 percent cumulative premium is paid on a 20-year bond of a $1,000 par amount.The bond is now priced at $925. What would the bond's price be in five years if the yield to maturity is the same as it is now?a. $ 966.79b. $ 831.35c. $1,090.00d. $ 933.09e. $ 925.00

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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