Kimberly purchased a $6,500 bond that was paying a 6.75% compounded semi-annually coupon rate and had 3 more years to maturity. The yield rate at the time ofpurchase was 5.75% compounded semi-annually.a. How much did Kimberly pay for the bond?Round to the nearest centb. What was the amount of premium or discount on the bond?

Bonds are different kinds of debt instruments in which interest is paid annually or periodically and…

Kimberly purchased a $6,500 bond that was paying a 6.75% co annually coupon rate and had 3 more years to maturity. The yi purchase was 5.75% compounded semi-annually. a. How much did Kimberly pay for the bond? Round to the nearest cent h. What was the mium or discount on the bond

Kimberly purchased a $6,500 bond that was paying a 6.75% co annually coupon rate and had 3 more years to maturity. The yi purchase was 5.75% compounded semi-annually. a. How much did Kimberly pay for the bond? Round to the nearest cent h. What was the mium or discount on the bond

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 2EB: Waylan Sisters Inc. issued 3-year bonds with a par value of $100,000 and a 6% annual coupon when the...

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Concept explainers

Debenture Valuation

A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.

Note Valuation

It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:

Question

Kimberly purchased a $6,500 bond that was paying a 6.75% compounded semi-
annually coupon rate and had 3 more years to maturity. The yield rate at the time of
purchase was 5.75% compounded semi-annually.
a. How much did Kimberly pay for the bond?
Round to the nearest cent
b. What was the amount of premium or discount on the bond?

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