Miller Motorworks has a $1,000 par value,8% annual coupon bond with interest payable semiannually with a remaining term of 15 years.The annual market yield on similar bonds is 6%.What is the bond selling for today? (Round to the nearest whole dollar. )

Question

Quizplus · Accepted Answer

The bond's price is calculated using the present value of its future cash flows, which include semiannual coupon payments and the par value at maturity. With a coupon rate of 8% and a market yield of 6%, the bond sells at a premium, resulting in a price of approximately $1,196.

Miller Motorworks Has a $1,000 Par Value,8% Annual Coupon Bond