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t20 years, find the coupon payment, redemption value, purchase price and bond premium. (Bond Valuatio

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 16E

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Question

A 15,000, 5 ½% bonds with quarterly coupons is priced to yield 4 ½% converted quarterly.
If it is redeemable at 104% at the end of t20 years, find the coupon payment, redemption
value, purchase price and bond premium. (Bond Valuation)

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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