Answered: The par value of 10% debenture is…

The par value of 10% debenture is $1,000 with maturity is 3 years. What would be the price if interest rate is (a) 12%, (b) 10% and (c) 8%?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 4P

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

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1. The par value of 10% debenture is $1,000 with maturity is 3 years. What would be the price if interest rate is

(a) 12%,

(b) 10% and

(c) 8%?

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