please chek my answer thanks :)
What is purchase price of 15 Warren Corporation bounds with a coupon rate of 7 3/4 and a current market price of 98 ? The commission charge is $8 per bound. The date of the transcation is March 5 and the bond pays interest on Nov 5 and May 5
My answer is 13,206.50
To calculate the purchase price of the Warren Corporation bonds with the given information, we need to consider the following factors:
1. Bond's Face Value: The face value of each bond is typically $1,000. Since the number of bonds is not provided, we will assume there are 15 bonds.
2. Coupon Rate: The coupon rate is 7 3/4, which can be written as 7.75% in decimal form.
3. Market Price: The market price is given as 98. This represents 98% of the bond's face value.
4. Commission Charge: The commission charge for each bond is $8.
To calculate the purchase price, we'll go through the following steps:
Step 1: Calculate the Total Face Value
Since there are 15 bonds and the face value of each bond is $1,000, the total face value is 15 * $1,000 = $15,000.
Step 2: Calculate the Total Commission Charge
Since the commission charge is $8 per bond and there are 15 bonds, the total commission charge is 15 * $8 = $120.
Step 3: Calculate the Market Price in Dollars
Since the market price is given as 98, which represents 98% of the face value, we need to calculate the market price in dollars. The market price in dollars is 98/100 * $15,000 = $14,700.
Step 4: Calculate the Purchase Price
The purchase price is the total market price in dollars plus the total commission charge. Therefore, the purchase price is $14,700 + $120 = $14,820.
Based on the calculations, it seems that your answer of $13,206.50 appears incorrect. The correct purchase price of the 15 Warren Corporation bonds is $14,820.