Respuesta :
Par value for a bond is typically $1,000 or $100 because these are the usual denominations in which they are issued. the market price of this bond if the face value is $1,000the market price of this bond if the face value is $1,000 because of the following figure, The correct answer is
A. $893.99
Explanation:
- Luxury Properties offers bond with a coupon rate of 9.5 percent paid semiannually. The yield to maturity is 11.2 percent and the maturity date is 11 years from today. What is the market price of this bond if the face value is $1,000 is found to be $893.99.
- A bond's face value is called the amount of the issuer who provides to the bondholder, when once the maturity is reached.
- The Par value for a bond is typically found to be $1,000 or $100 because these are the actual dominant figures in which they are given.
- market interest rate i = 11.2 %
- market price of bond = P = $1,000
- The market price of a bond is found by using the current interest rate as compared to the interest rate which is given on the bond.
- when a person buys a new bond for the purpose of keeping it for maturity, market interest rates, and the yields does not affect you, only when the bond is called.
