Question: Can this question be solved using the equation provided? I got 26.52 using this equation instead of 15.223. Please explain. 5. A 20 year 5,000

 Can this question be solved using the equation provided? I got26.52 using this equation instead of 15.223. Please explain. 5. A 20

Can this question be solved using the equation provided? I got 26.52 using this equation instead of 15.223. Please explain.

5. A 20 year 5,000 bond that pays 4% annual coupons mature at par. It is purchased to yield 5% annual for the first 12 years and 6% annual thereafter. Calculate the amount for accumulation of discount for the 8th coupon. When the bond sold at discount, Pt, the principal paid in tth coupon is negative. We called as Pt=C(jg)vnt+1 as amount for accumulation of discount in the tth coupon. Thus {Pt} form an increasing sequence. Since Bt=Bt1Pt this implies, Bt form an increasing sequence too and the process of finding the intermediate book values is called as writing up the bond

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