Question

plz show the calculation thx

A client is considering an investment in a 6%, $5,000

par value, 8-year Hydro Quebec bond. Assuming a discount rate of 7.5%, and semi-annual coupon payments. What amount will this bond sell for? At a premium or at a discount to par value?

*A*. This bond will sell at a discount to its par value at a price of $4,554.86.

B. This bond will sell at a discount to its par value at a price of $4,454.89.

C. This bond will sell at a premium to its par value at a price of $5,554.86.

D. This bond will sell at a premium to its par value at a price of $5,454.34.

Economics