Blossom, Inc., has issued a three-year bond that pays a coupon rate of 6.0 percent. Coupon payments are made semiannually. Given the market rate of interest of 4.0 percent, what is the market value of the bond?

Blossom, Inc., has issued a three-year bond that pays a coupon rate of 6.0 percent. Coupon payments are made semiannually. Given the market rate of interest of 4.0 percent, what is the market value of the bond?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 2PA: On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The...

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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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