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 8% bonds of United Telecom. a. The price of the $400,000 bond issued at 75.25 is $ b. The price of the $400,000 bond issued at 104.25 is S c. The price of the $400,000 bond issued at 95.50 is $ c. The price of the $400,000 bond issued at 102.50 is S Requirement 2. Which bond will United Telecom have to pay the most to retire at maturity? Explain your answer. 6 Requirements 1, compute the price of the following 8% bonds of United Telecom. a. S400,000 issued at 75.25 b. $400,000 issued at 104.25 c. $400,000 issued at 95.50 d. $400,000 issued at 102.50 Which bond will United Telecom have to pay the most to retire at maturity? Explain your answer [-] 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 United Telecom will pay $400,000 at maturity for all four of the bonds. The bonds all have the same maturity value.

Solution

Requirement 1 (a) The Price of the $400,000 Bond issued at 75.25 is ________ The Price of the Bond = $400,000*75.25/100 =$301,000 (b) The Price of the $400,000 Bond issued at 104.25 is ________ The Price of the Bond = $400,000*104.25/100 =$417,000 (C ) The Price of the $400,000 Bond issued at 95.50 is ________ The Price of the Bond = $400,000*95.50/100 =$382000 (d) The Price of the $400,000 Bond issued at 102.50 is ________ The Price of the Bond = $400,000*102.50/100 =$410,000 Requirement 2 Which bond will united telecom have to pay the most to retire at maturity ? Explain your answer Answer : United telecom will pay $400,000 at maturity for all four of the bonds. The Bonds all have the same maturity value all of the Bonds issued at different prices (at premium or at Discount). But they all have the Same face value and maturity value of the bonds. All the four bonds have to pay the $400,000 for each bond at maturity date. The four bonds has the exactly same maturity amount that equal to $400,000.