Wall Street Journal lists a bond as Apex 9s14 and shows the price as 88.875. If your required rate of return is 10%, would you buy one of these bonds in 2001? The price of the bond is 88.875. This means it is selling for 88.875% of its face value. For a $1000 bond, it is $888.75. The term 9s14, pronounced as "nines of fourteen" means that the coupon rate of the bond is 9% and that it will mature in 2014. The bond matures after 13 years and makes 26 semiannual interest payments. The annual interest paid is $90. Each semiannual interest payment is $45. The semiannual required rate of return is 5%. [Hint: Use bond pricing formula]
