A 20,000, 1 ½% bonds with annually coupons are priced to yield 4 ½% converted annually. If it is redeemable at 104% at the end of 21 years, find the coupon payment, redemption value, purchase price and bond premium. (Bond Valuation)

A 20,000, 1 ½% bonds with annually coupons are priced to yield 4 ½% converted annually. If it is redeemable at 104% at the end of 21 years, find the coupon payment, redemption value, purchase price and bond premium. (Bond Valuation)

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 5Q

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Question

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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