Question

McCurdy Co.'s Class Q bonds have a 12-year maturity, $1,000 par value, and a 6% coupon...

McCurdy Co.'s Class Q bonds have a 12-year maturity, $1,000 par value, and a 6% coupon paid semiannually (3% each 6 months), and those bonds sell at their par value. McCurdy's Class P bonds have the same risk, maturity, and par value, but the p bonds pay a 6% annual coupon. Neither bond is callable. At what price should the annual payment bond sell?

Select the correct answer.

a. $992.49
b. $980.63
c. $974.70
d. $998.42
e. $986.56
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Homework Answers

Answer #1

Solution:-

Face Value of Bond = $1,000

NPER = 12 years

Coupon Payment = $1,000 * 6%

Coupon Payment = $60

To Calculate Rate of Interest-

Rate of Interest =

Rate of Interest = 6.09%

To Calculate Price of Bond-

The Correct Answer is point A i.e. $992.49

If you have any query related to question then feel free to ask me in a comment.Thanks. Please rate.

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