Question

Bally's Corporate Bond pays a semi-annual coupon at 8% coupon rate. If this bond has 15 years until maturity and the market rate of interest (rd) is 6% what is the value of this bond.

Group of answer choices

$ 827.08

$1,000.00

$ 724.70

$1,196.00

$ 587.06

Answer 1

Computation Of Bond Value
a	Semi-annual Interest Amount	$                       40.00
	($1000*8%/2)
b	PV Annuity Factor for (30 Years,3%)	19.600441
c	Present Value Of Annual Interest (a*b)	$                    784.02
d	Redemption Value	$                 1,000.00
e	PV Factor Of (30 Years,3%)	0.41199
g	Present Value Of Redemption Amount (d*e)	$                    411.99
f	Price Of The Bond (c+g)	$                 1,196.00