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Assume that you are considering the purchase of a 15-year bond with an annual coupon rate of 9.5%. The bond has face value of $1,000 and makes semiannual interest payments. If you require an 11.0% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

a.$891.00
b.$913.27
c.$936.10
d.$959.51
e.$983.49

Wachowicz Corporation issued 15-year, noncallable, 7.5% annual coupon bonds at their par value of $1,000 one year ago. Today, the market interest rate on these bonds is 5.5%. What is the current price of the bonds, given that they now have 14 years to maturity?

a.$1,077.01
b.$1,104.62
c.$1,132.95
d.$1,162.00
e.$1,191.79

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  • Category:- Business Economics
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