Assume that three years ago, you purchased a 10-year corporate bond that pays 9.5 percent. The purchase price was $1,000. Also, assume that today comparable bonds are paying 8 percent. a ) What is the annual dollar amount of interest that you receive from your bond investment? (Omit the "$" sign in your response.) Amount of interest $ b) Assuming that comparable bonds are paying 8 percent, what is the approximate market price for which you could sell your bond? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Market price $ c-1) Did the bond increase or decrease in value? multiple choice 1 Decreased in value. Increased in value. c-2) Why did the bond increase or decrease in value? multiple choice 2 Because market rates decreased. Because market rates increased.
Assume that three years ago, you purchased a 10-year corporate bond that pays 9.5 percent. The purchase price was $1,000. Also, assume that today comparable bonds are paying 8 percent. a ) What is the annual dollar amount of interest that you receive from your bond investment? (Omit the "$" sign in your response.) Amount of interest $ b) Assuming that comparable bonds are paying 8 percent, what is the approximate market price for which you could sell your bond? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Market price $ c-1) Did the bond increase or decrease in value? multiple choice 1 Decreased in value. Increased in value. c-2) Why did the bond increase or decrease in value? multiple choice 2 Because market rates decreased. Because market rates increased.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...
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