The Florida Investment Fund buys 58 bonds of the Gator Corporation through a broker. The bonds pay

Question:

The Florida Investment Fund buys 58 bonds of the Gator Corporation through a broker. The bonds pay 10 percent annual interest. The yield to maturity (market rate of interest) is 12 percent. The bonds have a 10-year maturity.

Using an assumption of semiannual interest payments:

a. Compute the price of a bond (refer to “Semiannual Interest and Bond Prices” in Chapter 10 for review if necessary).

b. Compute the total value of the 58 bonds.

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