A 10-year bond with coupons at 8 percent convertible quarterly will be redeemed at 1600. The bond is bought to yield 12 percent convertible quarterly. The purchase price is 860.40. Calculate the par value. A 800 B 1000 C 1200 D 1400 E 1600
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- The bond has a coupon rate of 8% per annum, with interest being paid quarterly. This means each quarter, the bond pays 2% of its par value as interest (since 8% per annum divided by 4 quarters equals 2% per quarter). - The bond will be redeemed at $1600 after 10 Show more…
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