Jasmine Ltd is considering issuing bonds to raise funds for a new project. The following three options are being considered.
Bond Coupon
Rate
Coupon/Compounding
Frequency Yield Term in
years Face Value
A 0% half-yearly 7.5% 5 $1,000
B 6.5% half-yearly 7.5% 10 $1,000
C 8.4% yearly 7.5% 8 $1,000
a) Calculate the market price of each bond.
b) Classify each bond as either selling at a premium, par or discount.
c) Assume Jasmine has decided to issue only B Bonds. If Jasmine Ltd needs to raise $465,260 how many bonds would need to be issued?