A Company Issues Bonds with a Par Value of $800,000

question 31

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A company issues bonds with a par value of $800,000 on their issue date. The bonds mature in 5 years and pay 6% annual interest in two semiannual payments. On the issue date, the market rate of interest is 8%. Compute the price of the bonds on their issue date. The following information is taken from present value tables:

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Definitions:

Mini-Dow Futures

Futures contracts based on the Dow Jones Industrial Average but with a smaller contract size, allowing for more accessible investment.

Listed Price

The official price of a commodity, security, or asset that is publicly quoted on an exchange.

Futures Contract

Financial derivatives that obligate the buyer to purchase, and the seller to sell, a specified asset at a predetermined future date and price.

Futures Contracts

Agreements to buy or sell an asset at a future date at a price agreed upon today.