On January 1, 2010, Water Wonderland issues $20 million of 8% bonds, due in ten years, with interest payable semi-annually on June 30 and December 31 each year. 1. If the market rate is 7%, will the bonds issue at face amount, a discount, or a premium

the bonds will trade at a Premium

Explanation:

When the Yield to Maturity (YTM) is less than the Coupon Rate, the price of the Bond will be greater than the par value and we say that the Bond is trading at a Premium.

The Yield to Maturity of 7% is less than the Coupon rate 8% hence the bond will trade at a Premium.

Calculation of the Price of Bond

Alternatively we can calculate the price of the Bond a see for ourselves as follows :

FV = $20,000,000

PMT = ($20,000,000 × 8%) ÷ 2 = $8,00,000

P/YR = 2

YTM = 7 %

N = 10 × 2 = 20

PV = ?

Using a Financial calculator to input the values as above we can calculate the Price of Bond (PV) as $21,421,240.

answer; /// i believe that the correct answer is ///making it easy to work with the organization;

match each type of restriction with one of its effects.

a. land-use laws

b. labor laws

c. banking regulations

a. controlled development of towns and cities

b. protection of young workers

c. greater financial stability