ZuoTi.Pro
Question

Jules issues 4.5%, five-year bonds dated January 1, 2009, with a $230,000 par value. The bonds...

Jules issues 4.5%, five-year bonds dated January 1, 2009, with a $230,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $235,160. The annual market rate is 4% on the issue date.

Required:

Is this bond trading at a discount or premium

A.discount

B. premium

Explain why the bond in question is trading at a discount/premium (answer should be less than 20 words).

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Answer: bond Trading at: B) Premium

This bond is Trading at Premium. Premium or Discount depends on the relation between the Bond Rate and the Market rate. if the MArket rate is less than the bond rate bond will sell at Premium Vice-versa. in the above question Market rate is 4% and the bond rate is 4.50% so bond must sell at Premium.

0 0
Add a comment
Know the answer?
Add Answer to:
Jules issues 4.5%, five-year bonds dated January 1, 2009, with a $230,000 par value. The bonds...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Ellis issues 8.0%, five-year bonds dated January 1, 2016, with a $430,000 par value. The bonds...

    Ellis issues 8.0%, five-year bonds dated January 1, 2016, with a $430,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of S466,680. The annual market rate is 6% on the issue date.

  • Ellis issues 8.5%, five-year bonds dated January 1, 2017, with a $540,000 par value. The bonds...

    Ellis issues 8.5%, five-year bonds dated January 1, 2017, with a $540,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $597,579. The annual market rate is 6% on the issue date. 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds’ life. 3. Prepare the journal entries to record the first two interest payments.

  • Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $570,000 par value. The...

    Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $570,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $582,159. The annual market rate is 6% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds’ life. 3. Prepare the journal entries to record the first two interest payments.

  • Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $250,000 par value. The...

    Ellis Company issues 6.5%, five-year bonds dated January 1, 2019, with a $250,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $255,333. The annual market rate is 6% on the issue date. Required: 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life. 3. Prepare the journal entries to record the first two...

  • Ellis Company issues 8.0%, five-year bonds dated January 1, 2019, with a $600.000 par value. The bonds pay interest on...

    Ellis Company issues 8.0%, five-year bonds dated January 1, 2019, with a $600.000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $651,181. The annual market rate is 6% on the issue date. Required: 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds life. 3. Prepare the joumal entries to record the first two...

  • Ellis issues 8.0%, five-year bonds dated January 1, 2017, with a $430,000 par value. The bonds...

    Ellis issues 8.0%, five-year bonds dated January 1, 2017, with a $430,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $466,680. The annual market rate is 6% on the issue date. Required: 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest...

  • Ellis issues 7.5%, five-year bonds dated January 1, 2017, with a $520,000 par value. The bonds...

    Ellis issues 7.5%, five-year bonds dated January 1, 2017, with a $520,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $553,268. The annual market rate is 6% on the issue date. Required: 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest...

  • Ellis issues 7.5%, five-year bonds dated January 1, 2017, with a $520,000 par value. The bonds...

    Ellis issues 7.5%, five-year bonds dated January 1, 2017, with a $520,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $553,268. The annual market rate is 6% on the issue date. Required: 1. Complete the below table to calculate the total bond interest expense over the bonds' life. 2. Prepare a straight-line amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest...

  • Ellis Company issues 9.0%, five-year bonds dated January 1, 2019, with a $480,000 par value. The...

    Ellis Company issues 9.0%, five-year bonds dated January 1, 2019, with a $480,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $499,483. The annual market rate is 8% on the issue date. Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds’ life. 3. Prepare the journal entries to record the first two interest payments. 1. Compute...

  • Legacy issues $710,000 of 8.0%, four year bonds dated January 1, 2017, that pay interest semiannually...

    Legacy issues $710,000 of 8.0%, four year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. They are issued at $621,812 and their market rate is 12% at the issue date. 2. Determine the total bond interest expense to be recognized over the bonds' life. Total bond interest expense over life of bonds: Amount repaid payments of Par value at maturity Total repaid Less amount borrowed Total bond interest expense Legacy issues $710,000 of...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT