A $10,000, 6.2 bond with quarterly coupons redeemable at par is purchased 9 years before maturity...
A $10,000, 6.2 bond with quarterly coupons redeemable at par is purchased 9 years before maturity to yield 7% compounded quarterly. Determine the premium or discount.
A. $539.35
B. $469.14
C. $499.99
D. $530.86
Homework Answers
| K = Nx4 |
| Bond Price =∑ [(Quarterly Coupon)/(1 + YTM/4)^k] + Par value/(1 + YTM/4)^Nx4 |
| k=1 |
| K =9x4 |
| Bond Price =∑ [(6.2*10000/400)/(1 + 7/400)^k] + 10000/(1 + 7/400)^9x4 |
| k=1 |
| Bond Price = 9469.14 |
Discount = price-par value = 10000-9469.14 = -530.86
d is correct
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