Lucia Gabrielli purchased an n-year par-value $2000 bond that had a coupon rate of 9% convertible quarterly;
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Lucia Gabrielli purchased an n-year par-value $2000 bond that had a coupon rate of 9% convertible quarterly; here 4n is an integer. Her sister Elana purchased a par-value bond with an identical coupon rate but having a term of 2n years. The coupons that Lucia and Elana received for the n years they both held theirs bonds were identical, and yield rate used to determine the prices of each of the bonds was a nominal rate of 6% convertible quarterly. Elana paid $233.02 more than Lucia.
Calculate the number of coupons in Lucia's bond; use the premium discount equation.
Related Book For
Fundamentals of Investments Valuation and Management
ISBN: 978-0077283292
5th edition
Authors: Bradford D. Jordan, Thomas W. Miller
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