Asked by
Lailani Idusora
on Dec 20, 2024
Verified
Thomson Inc has a $1,000, 6% coupon bond with interest payable semiannually and a remaining term of 20 years. The market yield on similar bonds is 10%. What percentage of face value is the bond selling for today?
A) 65.68%
B) 65.94%
C) 60.00%
D) None of the above
Coupon Bond
A type of bond that pays the holder periodic interest payments based on the stated coupon rate and then returns the principal at maturity.
Market Yield
The annual income return on an investment, expressed as a percentage of the market price.
Face Value
The nominal value printed on a security or financial instrument, such as a bond or stock, at issue.
- Grasp the basic concepts of bond valuation along with the influence of market conditions on the pricing and yield of bonds.
- Outline the impact that changes in interest rates have on the market valuation of bonds.
Verified Answer
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Learning Objectives
- Grasp the basic concepts of bond valuation along with the influence of market conditions on the pricing and yield of bonds.
- Outline the impact that changes in interest rates have on the market valuation of bonds.