On December 31, 2021, Linda purchased from Wendy a $1,000 par value bond (the Bond) issued...
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On December 31, 2021, Linda purchased from Wendy a $1,000 par value bond ("the Bond") issued by ABC Ltd. ('ABC"). ABC issued the Bond on July 1, 2020. The Bond as issued by ABC had a 15 year maturity period. Linda was attracted to the Bond because she knew that she would receive $75.00 in interest twice per year. Linda has always followed the investment advice given to her by her Father, who advised Linda that a yield of 8% would always be adequate to satisfy her investment needs. Required: (a) What price did Linda pay for the Bond? {5 Marks] (b) What price would Linda have paid for the Bond if she had received interest only once per year? [5 marks] On December 31, 2021, Linda purchased from Wendy a $1,000 par value bond ("the Bond") issued by ABC Ltd. ('ABC"). ABC issued the Bond on July 1, 2020. The Bond as issued by ABC had a 15 year maturity period. Linda was attracted to the Bond because she knew that she would receive $75.00 in interest twice per year. Linda has always followed the investment advice given to her by her Father, who advised Linda that a yield of 8% would always be adequate to satisfy her investment needs. Required: (a) What price did Linda pay for the Bond? {5 Marks] (b) What price would Linda have paid for the Bond if she had received interest only once per year? [5 marks]
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Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
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