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Answers for A: Bonds semiannual coupon payment, bonds annual coupon payment, bondholders require return; $37.50, $75.00, $18.75, $56.25

Answers for B: Bond's market price, Bond's par value, Bond's annual coupon payment

Answers for C: 7.1250%, 7.5000%, 4.5000%, 6.5000%

Reasonable or unreasonable

$758, $1408, $1083, $1300

Less than, greater than, equal to

trading at par, discount, or premium

Intrinsic Value Complete the following table by identifying the appropriate corresponding variables used in the equation. Unknown Variable Name Variable Value Bond's semiannual coupon payment $37.50 Bond's par value $1,000 Semiannual required return 4.5000% Based on this equation and the data, it is reasonable to expect that Noah's potential bond investment is currently exhibiting an intrinsic value less than $1,000. Now, consider the situation in which Noah wants to earn a return of 4.50%, but the bond being considered for purchase offers a coupon rate of 7.50%. Again, assume that the bond pays semiannual interest payments and has three years to maturity. If you round the bond's intrinsic value to the nearest whole dollar, then its intrinsic value of $1,083 ounded to the nearest whole dollar) is less than its par value, so that the bond is trading at a discount Given your computation and conclusions, which of the following statements is true? O When the coupon rate is greater than Noah's required return, the bond's intrinsic value will be less than its par value O When the coupon rate is greater than Noah's required return, the bond should trade at a discount. o A bond should trade at a par when the coupon rate is greater than Noah's required return. O When the coupon rate is greater than Noah's required return, the bond should trade at a premium

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