Answer:
Since bond market values are expressed as a percentage of their bond value, a $1,000 bond that is being sold at 93 would be trading at $ __________.
$930
Explanation:
a) Calculation:
93% of $1,000 = $930
b) Let assume that Jophas Company sells its bond at $930. It implies that the bond is being sold at a discount. The bond is discounted when its selling price of $930 is less than the face value of $1,000. The bondholders are paying less than they would be paid at the bonds' maturity. At maturity, the bondholders will be paid $1,000 for each of the bonds they hold. This is in addition to the coupon payments that will be paid by the company periodically.
