Bond prices depend on the market rate of interest, stated rate of interest, and
ID: 2603832 • Letter: B
Question
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.Explanation / Answer
Requirement 1
Face Value × Issue Price = Market Price
a. $400000 × 0.7525 = $301000
b. $400000 × 1.0425 = $417000
c. $400000 × 0.9550 = $382000
d. $400000 × 1.0250 = $410000
Requirement 2
United Telecom will pay $400000 at maturity for all four of the bonds. The bonds all have the same maturity value.