A municipal bond with a face value of $10,000 was issued today with an interest rate of
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A municipal bond with a face value of $10,000 was issued today with an interest rate of 6% per year payable semiannually. The bond matures 20 years from now. If an investor paid $9,000 for the bond and holds it to maturity, all of the following equations will yield the correct semiannual rate of return except:
(a) 0 = −9000 + 300(P/A,i*,40) + 10,000(P/F,i*,40)
(b) 0 = −9000(F/P,i*,40) + 300(F/A,i*,40) + 10,000
(c) 0 = −9000(A/P,i*,40) + 300 + 10,000(A/F,i*,40)
(d) 0 = −9000 + 600(P/A,i*,40) + 10,000(P/F,i*,40)
Face ValueFace value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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