Assume That a 15-Year, $1,000 Face Value Bond Pays Interest

Assume that a 15-year, $1,000 face value bond pays interest of $37.50 every 3 months. If you require a nominal annual rate of return of 12 percent, with quarterly compounding, how much should you be willing to pay for this bond? (Hint: The PVIFA and PVIF for 3 percent, 60 periods are 27.6748 and 0.1697, respectively.)

A) $ 821.92
B) $1,207.57
C) $ 986.43
D) $1,120.71
E) $1,358.24

Correct Answer:

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