Question

The prices of several bonds with face values of $1,000 are summarized in the following​ table:...

The prices of several bonds with face values of

$1,000

are summarized in the following​ table:

Bond

A

B

C

D

Price

$977.74

$1,039.51

$1,147.39

$1,000.00

For each​ bond, state whether it trades at a​ discount, at​ par, or at a premium.

Bond A is selling at

▼

a discount

par

a premium

. ​(Select from the​ drop-down menu.)Bond B is selling at

▼

a discount

par

a premium

. ​(Select from the​ drop-down menu.)Bond C is selling at

▼

a discount

par

a premium

. ​(Select from the​ drop-down menu.)Bond D is selling at

▼

a discount

par

a premium

. ​(Select from the​ drop-down menu.)

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Homework Answers

Answer #1

- Face Value of Bond = $1000

a). Price of Bond A = $977.74

Since, the Price of Bond is less than the Face Value it is trading at Discount.

Ans- Discount

b). Price of Bond B = $1039.51

Since, the Price of Bond is higher than the Face Value it is trading at Premium.

Ans- Premium

c). Price of Bond C = $1147.39

Since, the Price of Bond is higher than the Face Value it is trading at Premium.

Ans- Premium

d). Price of Bond D = $1000

Since, the Price of Bond is same as that of the Face Value it is trading at Par.

Ans- Par

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