On January 1, 2009 Tonks Hair Products Inc. issues $500,000 of 10 year, 7.5% bonds. Thebonds pay interest semiannually on July 1st and January 1st. The bonds have a call provisionwhich allows Tonks to repurchase them at a price of 105 any time after the firstmarket yield for the bonds at the date of issue is 7%. Tonks pays $8,000 in issuance costsand has a June 30th year end.year.TheTonks calls the bonds on 11/1/10, four months after the July 2010 payment.1. At what premium or discount does this issue sell?

The price of a bond: The price of a bond is the price at which a bond is sold. When bonds are issued…

On January 1, 2009 Tonks Hair Products Inc. issues $500,000 of 10 year, 7.5% bonds. The ponds pay interest semiannually on July 1st and January 1st. The bonds have a call provision рay which allows Tonks to repurchase them at a price of 105 any time after the first year. The narket yield for the bonds at the date of issue is 7%. Tonks pays $8,000 in issuance costs and has a June 30th year end. Tonks calls the bonds on 11/1/10, four months after the July 2010 payment. 1. At what premium or discount does this issue sell?

On January 1, 2009 Tonks Hair Products Inc. issues $500,000 of 10 year, 7.5% bonds. The ponds pay interest semiannually on July 1st and January 1st. The bonds have a call provision рay which allows Tonks to repurchase them at a price of 105 any time after the first year. The narket yield for the bonds at the date of issue is 7%. Tonks pays $8,000 in issuance costs and has a June 30th year end. Tonks calls the bonds on 11/1/10, four months after the July 2010 payment. 1. At what premium or discount does this issue sell?

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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