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ch4aika [34]
2 years ago
6

A 4.9 percent corporate coupon bond is callable in 10 years for a call premium of one year of coupon payments. Assuming a par va

lue of $1,000, what is the price paid to the bondholder if the issuer calls the bond?
Business
1 answer:
NeTakaya2 years ago
4 0

Answer:

$1,049

Explanation:

Data given in the question

Par value = $1,000

Interest rate = 4.9%

Time period = 10 years

So, by considering the above information, the price paid to the bond holder is

= Par value + Par value × rate of interest

= $1,000 + $1,000 × 4.9%

= $1,000 + $49

= $1,049

Hence. the price paid to the bond holder is $1,049

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