Question

Matt's mats , inc. recently issued a consul bond with a 6% coupon rate and a face value of $1,000. today the bonds were being traded based on a required return of 7.5%. at what price were the bonds trading to provide that return? a. $0.00 b. $7,00 c. $500.00 d. $800

Answer 1

The price were the bonds trading to provide that return according to the interest rate is $800. So, The option D is correct.

According to the statement

we have given that the coupon rate is 6% and a face value of $1,000.

And we have to find that the return of 7.5%. at what price were the bonds trading to provide that return according to the interest rate.

So, For this purpose, we know that the

The face value is $1000

So, n become 1000

then n = 1000 it becomes the input.

And the return is 7.5% per year.

So,

INPUTS

n=1000

And I/YR=7.5

Then PMT is PMT=60

FV=0

Then the OUTPUT value is:

PV= 800.00

So, The price were the bonds trading to provide that return according to the interest rate is $800. So, The option D is correct.

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