Question

Quizlit A $1,000 bond quote in the business press reports Coupon (%) of 3.45, Maturity of 2024, Current ($) of 1,012.90 and Yield (%) of 3.29. Which of the following is true regarding this bond?

a) When the bond matures in 2024, the issuer will pay $1,000 plus any interest owed.
b) The bond sold at a discount because the stated rate is greater than the market rate of interest.
c) The bond sold for $1,000 on that day.
d) The investor who purchased the bond at the current price will earn a return of 3.29%
e) The bond sold at a premium because the stated rate is greater than the market rate of interest.
f) When the bond matures in 2024, the issuer will pay $949.20 plus any interest owed.
g) The bond sold for $1,012.90 on that day.v

Answer 1

A) when a bond matures, the company must pay the face of the bond plus any interest due.

D) since the market rate is 3.29%, that is the interest that the investor will receive from the bond

E) when a bond is sold at a higher price than face value ($1,0112.90 > $1,000), it is sold at a premium

G) the bond's price for that specific day was $1,012.90