1. When the market value of debt is the same as its face value, it is said to be selling at the:
a) discounted value.
b) maturity value.
c) par value.
d) yield value.
2. Devine Divots issued a bond a few years ago. The bond has a face value equal to $1,000 and pays investors $30 interest every six months. The bond has eight years remaining until maturity. If an investor requires a 7 percent rate of return to invest in this bond, what is the maximum price the investor should be willing to pay to purchase the bond? (Round the answer to two decimal places.)
a) $940.29
b) $1,062.81
c) $965.63
d) $939.53