Scott Rolen, major league third baseman, agrees to defer $5 million from his salary this year for 10 years at 7 percent compound
2 answers:
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Answer:
option (d) $929.42
Explanation:
Data provided in the question:
Coupon bonds payments = 5.65% semiannual
Yield to maturity, r = 6.94% = 0.0694
Face value = $1000
Now,
Coupon bond payments = × $1,000
= $28.25
market price per bond = Payment × +
Here,
n is the maturity period and 2n is due to the semiannual payments
Thus,
market price per bond = $28.25 × +
= $28.25 × 10.942 + 620.3
= $929.42
Hence,
The answer is option (d) $929.42