Bubba Gump Shrimp is issuing 20-year $1,000 bonds to finance a theme park based on the movie. The bonds will be issued on April 1, 2019, and will mature on April 1, 2039. The interest stated on the bond is 7%. The bonds were printed months ago with a special movie version and a coffee table book. The market rate for these bonds on April 1, 2019, will be 6% instead of 7% that were printed on the paper. The bonds will be sold initially on the first day at a premium to account for changes in interest rates.A) What will the price of the bonds be at issue date (note: it is not $1,000 because of the interest rate change)?B) What is the future value of these bonds?

Bubba Gump Shrimp is issuing 20-year $1,000 bonds to finance a theme park based on the movie. The bonds will be issued on April 1, 2019, and will mature on April 1, 2039. The interest stated on the bond is 7%. The bonds were printed months ago with a special movie version and a coffee table book. The market rate for these bonds on April 1, 2019, will be 6% instead of 7% that were printed on the paper. The bonds will be sold initially on the first day at a premium to account for changes in interest rates.A) What will the price of the bonds be at issue date (note: it is not $1,000 because of the interest rate change)?B) What is the future value of these bonds?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 3P

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