Final answer:
The issue price of the bond is $41,651, which is calculated by multiplying the face value of $40,049 by the stated price of 104, reflecting that the bond is being sold at a premium.
Step-by-step explanation:
The issue price of the bond is calculated by taking the face value and adjusting it according to the stated price, which is a percentage of the face value. For a $40,049 face value bond at a stated price of 104, the issue price is $40,049 x 1.04.
When bonds are sold, they can be issued at a premium, a discount, or at face value. The stated price of 104 percent indicates that the bond is being sold at a premium, which is above its face value. This premium occurs typically because the bond's coupon rate is higher than the prevailing market interest rates, making the bond more valuable to investors.
The coupon rate of 6% means the bond will provide semiannual interest payments at this rate until maturity. In this case, to find the issue price, one multiplies the face value by the percentage stated (104%), which reflects this premium. It's important to round to the nearest dollar as typically bond prices are quoted in whole dollars. Understanding bond pricing is essential for investors as it influences the bond's yield and the interest income, an important factor when comparing different bonds or considering the current interest rate environment for similar investments.