Acc202Kevles1 - you will pay $1269.87(plus fees for every...

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Account 202 Stephanie Kevles Chapter 4 14-4 The bond is selling at a premium. It pays 8% on its face value, but since current interest rates are currently lower than that you have to pay more than face value to buy it. As a result, the interest payments you'll get will correspond to what you would get on a bond issued at the current interest rate. Example: with an 8% interest rate, you will get $80 per year for every $1000 of the bond's face value. But
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Unformatted text preview: you will pay $1269.87 (plus fees) for every $1000 of face value. So the interest you will get on what you paid is 80 / 1269.87 = 6.3%. When current interest rates go lower, the market value of a bond increases and vice-versa. 14-5 April 1 st $24,000,000 Oct 1 st $1,200,000 Dec 31 st $600,000 14-7 14-11 14-13 Bond y is a CURRENT LIABILITY because it matures within one year ....
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This document was uploaded on 03/07/2010.

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