A Canadian Company Issues an 8-Year Term Bond with Face

question 42

Multiple Choice

A Canadian company issues an 8-year term bond with face value of $1,000 and 6% coupon rate.If the market prevailing effective rate of interest is 5.75%,what is the price an investor will have to pay? Note: The bond pays a $60 coupon (or interest) payment at the end of each of the 8 years and pays the face value at the end of the 8 years.

• A) $1,015.85
• B) $1,200.00
• C) $1,150.00
• D) $1,215.00

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