What Is the Purchase Price of a Bond That Has

question 30

Multiple Choice

What is the purchase price of a bond that has 4 years and 6 months until it matures? The face value of the bond is $3000 and the coupon rate is 5.2% compounded semi-annually. The yield rate is 7.5% compounded semi-annually.

• A) $2740.53
• B) $2440.53
• C) $2770.53
• D) $2447.53
• E) $2547.53

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Definitions:

Equilibrium Price

The price at which the quantity of a good demanded equals the quantity supplied, leading to market balance.

Equilibrium Quantity

The amount of goods or services that is supplied and demanded at the equilibrium price.

Price Floor

A minimum price set by the government for certain goods and services, which cannot legally be lowered.

Temporary Surplus

A short-term situation where the supply of a product or service exceeds its demand, often leading to price reductions.