You are considering purchasing a corporate bond with exactly twenty years left until it matures. This bond has an 8% annual coupon rate and makes coupon payments semiannually. Its face value (or maturity value) is $40,000, which you expect to receive at the end of the twentieth year. How much would you pay for this bond today if a. you required an APR six percent compounded semiannually?

b. you required an APR ten percent compounded semiannually?

c. you required an APR eight percent compounded semiannually?

Answer rating: 100% (QA)

To solve this problem we need to use the present value formula for a bond with periodic coupon payme... View the full answer