Suppose a bond with no expiration date has a face value of $10,000 and annually pays a

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Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $800. Compute and enter in the spaces provided in the accompanying table either the interest rate that the bond would yield to a bond buyer at each of the bond prices listed or the bond price at each of the interest yields shown. What generalization can be drawn from the completed table?

Bond Price                              Interest Yield, %

$ 8,000 …………………………….  ______

_______ ……………………………  8.9

$10,000 ……………………………. ______

$11,000 ……………………………. ______

_______ ……………………………  6.2


Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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Economics

ISBN: 978-0073375694

18th edition

Authors: Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn

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