Answer:
D. less than $10,000.
Explanation:
As for the provided information we have,
Bond face value = $10,000
Coupon rate = 6%
Maturity value = $10,000
Rate of interest = 7%
Number of period = 1
Bond value = [tex]C \times (\frac{(1- \frac{1}{(1 + 0.07)^1})}{0.07} ) + \frac{10,000}{(1 + 0.07)^1}[/tex]
Where, C = $10,000 [tex]\times[/tex] 0.06 = $600
Now putting values we have,
Bond value = [tex]600 \times (\frac{(1- \frac{1}{(1 + 0.07)^1})}{0.07} ) + \frac{10,000}{(1 + 0.07)^1} = 9,906.67[/tex]
Since the value is less than $10,000
Correct option is :
D. less than $10,000.
