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Author Question: Johnson Construction Inc. has issued 20-year 1,000 face value, 8 annual coupon bonds, with a yield ... (Read 120 times)

daltonest1984

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on: Jul 10, 2018
Johnson Construction Inc. has issued 20-year 1,000 face value, 8 annual coupon bonds, with a yield to maturity of 10. The current price of the bond is ________.
 
  A) 1,000.00
  B) 1,196.36
  C) 829.73
  D) There is not enough information to answer this question.

Question 2

Blackburn Inc. has issued 30-year 1,000 face value, 10 annual coupon bonds, with a yield to maturity of 9.0. The annual interest payment for the bond is ________.
 
  A) 100
  B) 90
  C) 50
  D) 45


blakeserpa

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: C
Explanation: C)
Bond Price = PMT  +
= 80  + = 829.73.
MODE = END
INPUT 20 10 ? -80 -1,000
KEY N I/Y PV PMT FV
CPT 829.73

Answer to Question 2

Answer: A
Explanation: A) The annual interest or coupon payment is equal to the coupon rate multiplied by the par value of the bond. Here that is (0.10)  (1,000) = 100.


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