Question

1. A bond's par value can also be called its

coupon payment.

present value.

market value.

face value.

2.Horizon offers a 12 percent coupon bond with semiannual payments and a yield to maturity of 10 percent. The bonds mature in 16 years. What is the market price per bond if the face value is $1,000?

$808

$911

$1,000

$1,158

Answer #1

HI

Bond par value is the amount that the investor receives at the end of term with coupon payment.

**It is also known as face value. Hence face value is
correct answer.**

2) Here bond price = (C/r)*(1-(1+r)^t) + F*(1+r)^-t

Face value F = $1000

semiannual coupon C = 1000*12%/2 = $60

semiannual rate r = 10%/2 = 5%

time t in semiannual = 16*2 = 32

So Price of bond = (60/5%)*(1-1.05^-32) + 1000*1.05^-32

= 1200*0.79 + 209.87

=948.16 + 209.87

**= $1158.03**

**Hence last option is correct here**

**Thanks**

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