We appreciate your visit to Consider a discount bond that matures in one year s time It has a face value of 140 000 and a yield to maturity of. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
A discount bond with a face value of $140,000 and a yield to maturity of 6% is analyzed to determine its current market price. the figure that is closest to the bond's current market price is $132,075.
The current market price of a bond can be calculated using the present value formula, which discounts the future cash flows (the face value) at the yield to maturity (YTM) rate.
In this case, the face value of the bond is $140,000, and the YTM is 6%. To calculate the current market price, we can use the formula:
Current Market Price = Face Value / (1 + YTM)^n
where n represents the number of years until maturity.
Substituting the values, we find:
Current Market Price = $140,000 / (1 + 0.06)^1
Calculating the expression inside the parentheses:
Current Market Price = $140,000 / 1.06
Current Market Price ≈ $132,075.47
Among the provided options, $132,075 is the figure closest to the bond's current market price. Therefore, the answer is d) $132,075.
To learn more about discount bond , refer:
brainly.com/question/29689720
#SPJ11
Thanks for taking the time to read Consider a discount bond that matures in one year s time It has a face value of 140 000 and a yield to maturity of. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!
- Why do Businesses Exist Why does Starbucks Exist What Service does Starbucks Provide Really what is their product.
- The pattern of numbers below is an arithmetic sequence tex 14 24 34 44 54 ldots tex Which statement describes the recursive function used to..
- Morgan felt the need to streamline Edison Electric What changes did Morgan make.
Rewritten by : Barada
