Question

A Bond Coupon of 4.75 means a buyer of the Bond will __________.

Group of answer choices

purchase the Bond for $475.00.

purchase the Bond for $47.50.

receive $47.50 per year in interest.

pay $47.50 per year in interest

If a Bond has a quote of 98.230 at closing, then how much would you pay if you purchased the Bond?

Group of answer choices

$982.30.

$98.23.

$982.00

$9,823.00.

A Bond with a quote 98.230 would be selling ____________.

Group of answer choices

at maturity value

above maturity value

only at par value

below maturity value

At maturity value, a Bond with a current quote of 98.240 will have a quote of _________.

Group of answer choices

4.75

100.00

98.240

5.00

Answer 1

The face value is $1000.

1. The buyer recieves the coupon payment. Here 4.75% coupon rate, buyer receives 4.75%*$1000=$47.5

Option C is correct

2.If it quotes at 98.23, with a face value of $1000, he will purcahse at $982.3 (98.23%*1000)

Option A is correct

3. It is selling at a discount becuase of trading at lower price than the face value (maturity value)

Option D is correct

4. At maturity value, the quote will be 100 because it pays the face value amount to those who holds the bond

Option B is correct