What is the market price (to the nearest dollar)of a 12% p.a.quarterly coupon bond with a face value of $100,three years to go until maturity when the current market yield is 8% p.a.?

Question

Quizplus · Accepted Answer

The correct answer is A because the market price of the bond is $111. This is because the bond has a face value of $100, a coupon rate of 12% p.a., and three years to go until maturity. The current market yield is 8% p.a., so the bond's price is $100 / (1 + 0.08/4)^12 = $111.

What Is the Market Price (To the Nearest Dollar)of a 12