Asked by
Jamie Dunham
on Dec 09, 2024
Verified
The semiannual, 12-year bonds of Tracey United are selling at par and have an effective annual yield of 4.6529%. What is the amount of each interest payment if the face value of the bonds is $1,000?
A) $22.50
B) $22.75
C) $23.00
D) $23.27
E) $23.50
Effective Annual Yield
The interest rate on an investment or loan, which is compounded more than once per year, represented as an annual rate.
Interest Payment
The payment made by a borrower to a lender as compensation for the use of borrowed money, typically calculated as a percentage of the principal.
Face Value
The nominal or dollar value printed on a bond or stock certificate; it is the amount paid to the holder at maturity.
- Absorb and employ the ideas of yield to maturity and coupon rates when determining the value of bonds.
- Evaluate the financial worth of bonds with consideration of various market situations, including interest rate trends and the deadline for maturity.
Verified Answer
KF
Learning Objectives
- Absorb and employ the ideas of yield to maturity and coupon rates when determining the value of bonds.
- Evaluate the financial worth of bonds with consideration of various market situations, including interest rate trends and the deadline for maturity.