Asked by
Matthew Hutsell
on Nov 28, 2024
Verified
Zumwalt Corporation's Class S bonds have a 12-year maturity,$1,000 par value,and a 5.75% coupon paid semiannually (2.875% each 6 months) ,and those bonds sell at their par value.Zumwalt's Class A bonds have the same risk,maturity,and par value,but the A bonds pay a 5.75% annual coupon.Neither bond is callable.At what price should the annual payment bond sell?
A) $943.98
B) $968.18
C) $993.01
D) $1,017.83
Par Value
The face value of a bond or the stock value stated in the corporate charter, which is the minimum at which shares can be issued.
Coupon Paid Semiannually
A bond payment made twice a year, representing the interest owed to bondholders.
Annual Coupon
The yearly interest payment made to bondholders, usually fixed and expressed as a percentage of the bond's face value.
- Determine the cost of bonds across diverse market scenarios.
- Evaluate the impact of bond agreements and market dynamics on the results of bond investments.
Verified Answer
KS
Learning Objectives
- Determine the cost of bonds across diverse market scenarios.
- Evaluate the impact of bond agreements and market dynamics on the results of bond investments.