Jan Murray buys a Sears bond at 114 What is the amount of pr

Jan Murray buys a Sears bond at 114. What is the amount of premium or discount the bond is selling for?

Solution

Let us assume current market rate of 1.000%

coupon rate of 1.000%

Given the current market rate of 1.000% for a similar bond, a bond with a face value of $114.00 and paying a coupon rate of 1.000% (compounding Quarterly), should be selling for $114.00 (selling at par).

Then the  amount of premium or discount the bond is selling for $114.00