Answered

Get reliable answers to your questions at Westonci.ca, where our knowledgeable community is always ready to help. Our platform offers a seamless experience for finding reliable answers from a network of experienced professionals. Get detailed and accurate answers to your questions from a dedicated community of experts on our Q&A platform.

Jim buys a 10-year bond with par value of 10,000 and 8% semi-annual coupons. The redemption value of the bond at the end of 10 years is 10,500. Calculate the purchase price to yield 6% convertible quarterly.a. 11,700.b. 14,100.c. 14,600.d. 15,400.e. 17,700.

Sagot :

Zviko

Answer:

a. 11,700

Explanation:

The purchase price of the Bond is its Present Value or PV. The fact the Bond is convertible quarterly does not affect the normal calculations of this Present Value.

Calculation of Bond Purchase Price

N = 10 × 2 = 20

FV = 10,500

PMT = ($10,000 × 8%) ÷ 2 = $400

I = 6 %

P/YR = 2

PV = ?

Using a financial calculator to input the values as shown above the PV would be $11,765

The purchase price is thus closest to $11,700

We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Thank you for trusting Westonci.ca. Don't forget to revisit us for more accurate and insightful answers.