Your current CD matures in a few days. You would like to find an investment with a higher rate of return than the CD. Stocks historically have a rate of return between 10% and 12%, but you do not like the risk involved. You have
been looking at bond listings in the newspaper. A friend wants you to look at the following corporate bonds as a
possible investment
Bond
Cur YRA Val Close Net Chg.
7.5
128
ABC 7-15
104
17 /
xyz7 15
8.4
1
100-
a
What price would you pay for each bond if you purchased one of them today? (Remember the face value is $1000.)
ABC: $1047.50
XYZ: $1005.00
b ABC: $1104.75
XYZ: $1100.50
ABC: $872
XYZ: $993
d ABC: $750
XYZ: S840
C