USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

-Refer to Exhibit 12.1. What price would you pay in dollars to purchase this bond?
A) $62
B) $9.954
C) $48.08
D) $99.544
E) $995.44

Question

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
 
-Refer to Exhibit 12.1. What price would you pay in dollars to purchase this bond?
A) $62 
B) $9.954 
C) $48.08 
D) $99.544 
E) $995.44

Quizplus · Accepted Answer

To calculate the price of the bond, you would use the present value formula for bonds, which takes into account the present value of the bond's future coupon payments and the present value of its face value. Without the specific details from Exhibit 12.1, such as the bond's face value, coupon rate, market interest rate, and years to maturity, it's not possible to perform the exact calculation here. However, bond prices are typically close to their face value unless interest rates have moved significantly. Among the options provided, $995.44 (option E) is the only one that resembles a typical bond price, as bonds are often issued with a face value of $1,000.