Twenty years-ago Goran Corp. issued 30-year bonds with a face value of $1,000. The coupon rate on these bonds is 8 percent paid semiannually. A current bondholder is considering selling the bond today. The market rate is now 12 percent. Required: a) Determine the price of the bond today. Show all computations. b) Explain why the amount you determined in part (a) is different from the par value of the bond. The amount determined in part (a) is different from the par value of the bond because the Yield rate and Coupon rate are different. The yield rate is at 12% and Bond pays 8%. In conclusion there is a discount for the bond rate.
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Home » Business » Twenty years-ago Goran Corp. issued 30-year bonds with a face value of $1,000. The coupon rate on these bonds is 8 percent paid semiannually. A current bondholder is considering selling the bond today. The market rate is now 12 percent.