What is the price of bond

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1. IBM purchased computer chips from NEC, a Japanese electronics concern, and was billed ¥250 million payable in three months. Two companies agree to share the currency risks. In the Price Adjustment Clause, the neutral zone is ¥113.38/$ - ¥127.42/$, the base rate is ¥120.4/$ and both parties will share the currency risk beyond a neutral zone. How much each party have to pay/receive if:

a) Exchange rate is ¥117.21/$

b) Exchange rate is ¥109.42/$

c) Exchange rate is ¥130.12/€

2. Spruce Corp. has a bond outstanding that has a $1,000 par value, semiannual coupon rate of 3% and a current yield of 5.5%. What is the price of the bond? Round to nearest whole dollar. HINT: remember the coupon yield formula.

A. $998.34

B. $1,102.56

C. $1,090.90

D. $1,002.21

Reference no: EM132031696

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