Two Bonds Have Face Value $1000,redeemable at Par in N-Years

question 89

Multiple Choice

Two bonds have face value $1000,redeemable at par in n-years and both bought to yield j₂ = 8%.Bond 1 has coupon rate j₂ = 12.7% and sells for $1406.36.Bond 2 has coupon rate j₂ = 6.35% and sells for $P.What is the value of P?

• A)Less than $850
• B)$850 or more,but less than $900
• C)$900 or more,but less than $950
• D)$950 or more

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Definitions:

Costing System

A method used by businesses to assign costs to products or services, which helps in pricing and profitability analysis.

Job Order Costing

An accounting method used to track costs and evaluate the profitability of custom jobs by accumulating the costs associated with a specific customer order.

Home Construction

The process of building residential homes, including planning, design, construction, and sale of new homes.

Prime Costs

The combination of direct materials and direct labor costs.