"BOND, PURCHASE PRICE, BUYING at PREMIUM or DISCOUNT. A BOND is a written contract to pay a fixed sum called the REDEMPTION VALUE on afuture specified date called the REDEMPTION DATE. FACEVALU is bond's face value.FACRATE% is its nominal or face interest rate. INVRATE% is the investor's desired interest rate. NUMYEARS is the term of the bond in years from purchase date. PAYMNINT is the payment interval in months (=1 for month, =3 for quarter, =6 for semiannully, =12 for annually). REDMVALU is bond's redemption value in dollars (not as percent of face value.) PERPAYMN is the periodic interest payment. PURPRICE is the purchase price. PREMIUM is the amount paid over redemption value and DISCOUNT is amount paid less than redemption value. A bond is bought at a PREMIUM/DISCOUNT if purchase price is greater/less than its REDEMPTION VALUE. *** Answers to problems. *** Note: JAJO is quarterly, MS is semiannually. (a) Set FACEVALU=500, FACRATE%=4, INVRATE%=5, NUMYEARS=25, PAYMNINT=3, REDMVALU=510 (500*1.02), discount of $78.24. (b) Set FACEVALU=1000, FACRATE%=4, INVRATE%=3, NUMYEARS=25, PAYMNINT=6, REDMVALU=1000, premium of $175.00. ||(a) Is a $500,4 %, JAJO bond redeemable in 25 years at 102 withan investor's rate of 5% bought at a premium or discount? (b) Is a $1,000, 4%, MS bond redeemable in 25 years at par with an investor's rate of 3% bought at a premium or discount? Type , to see answers. Type (F2) to return to helpfile.''(c) Copyright PCSCC, Inc., 1993"
