#2) What is the price of a 9-year, 12-percent, annual coupon bond when the market rate...

#2) What is the price of a 9-year, 12-percent, annual coupon bond when the market rate is 9 percent? The face value is $100.

A) $108.00

B) $121.31

C) $117.99

D) $84.01

Expert Solution

Interest = $100 * 0.12 = $12

Current bond price = $12(PVIFA 9%,12) + $100(PVIF 9%,12)

Current bond price = ($12 * 7.16072527639) + ($100 * 0.35553472507)

Current bond price = $121.31

jeff jeffy answered 2 years ago

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