Question

Bonds issued by Animite Energy are selling at a rate of 95. 230. Which of the following statements is true for a bond of par value $1,000? a. The market value includes a premium of $5. 23. B. The market value includes a premium of $10. 50. C. The market value includes a discount of $47. 70. D. The market value includes a discount of $95. 23.

Answer 1

The statements which is true for a bond of par value $1,000 is that the market value includes a discount of $47. 70.

What is market value?

Market value is the current price of a product, company, or something consorting to the stock of the market.

It is the price which is required to buy something in the current market.

Bonds issued by Animite Energy are selling at a rate of 95.230.  This is the bond percentage of the Animite energy in the market. This means if someone wants to buy 95.230 of this company's bond, then he get $100.

Now for the 1000 bonds, the amount required is,

$C=95.230\times10\\C=952.30$

Hence, for the 1000 bonds, the amount required is 952.30. Therefore, the discount will be,

$d=1000-952.30\\d=47.70$

Hence, the statements which is true for a bond of par value $1,000 is that the market value includes a discount of $47. 70.

Learn more about the market value here;

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