A $1000 bond,paying semi-annual coupons at j₂ = 7%,is redeemable in 5 years.It is purchased for $966.20 to yield j₂ = 8%.What is the bond redeemable at? (Answer to the nearest whole number. )

Question

Quizplus · Accepted Answer

The bond is purchased at a discount, so it will be redeemed at a premium. The yield to maturity is 8%, which is greater than the coupon rate of 7%, so the bond will be redeemed at a price greater than $1000. The correct answer is A) 101.

A $1000 Bond,paying Semi-Annual Coupons at J2 = 7%,is Redeemable

A $1000 Bond,paying Semi-Annual Coupons at J₂ = 7%,is Redeemable