Bond prices depend on the market rate of interest stated rat

Bond prices depend on the market rate of interest, stated rate of interest, and time Read the requirements. Requirement 1, Compute the price of the following 7% bonds of Friendship Telecom a. The price of the $200,000 bond issued at 75.75 is$ b. The price of the $200,000 bond issued at 103.25 is S c. The price of the $200,000 bond issued at 97.25 is$ c. The price of the $200,000 bond issued at 102.25 is $ Requirement 2. Which bond will Friendship Telecom have to pay the most to retire at maturity? Explain your answe Requirements 1, compute the price of the following 7% bonds of Friendship Telecom. a. $200,000 issued at 75.75 b. $200,000 issued at 103.25 c. $200,000 issued at 97.25 d. $200,000 issued at 102.25 Which bond will Friendship Telecom have to pay the most to retire at 2. Print Done Bond a. because it was issued at the lowest price. Bond b. because it was issued at the highest price Bond c. because it was issued at a discount. Bond d. because it was issued at a premium. Friendship Telecom will pay $200,000 at maturity for all four of the bonds. The bonds all have the same maturity value.

Solution

1. the following table shows the prices of the bonds:

Requirement 2:

Friendship Telecom will pay $200,000 at maturity for all four of the bonds. The bonds all have the same maturity value.

(note:at maturity the face value of bonds will be paid off, irrespective of whether they are issued at premium or discount).

a.$200,000 bond issued at 75.75 is (200,000 *75.75%)	$151,500
b.$200,000 bond issued at 103.25 is (200,000 * 103.25%)	$206,500
c.$200,000 bond issued at 97.25 is (200,000*97.25%)	$194,500
d.$200,000 bond issued at 102.25 is (200,000*102.25%)	$204,500