Mr. Simpson buys a $1000 bond paying semi-annual bond interest at i2) = 6.5% and redeemable...
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Mr. Simpson buys a $1000 bond paying semi-annual bond interest at i2) = 6.5% and redeemable at par in 20 years. Mr. Simpson's desired yield rate is i2) 7%. (a) [5 marks] How much did he pay for the bond? (b) [5 marks] After exactly 5 years, he sells the bond. Interest rates have dropped and the bond is sold to yield a buyer i(2) = 6%. Determine the sale price. Mr. Simpson buys a $1000 bond paying semi-annual bond interest at i2) = 6.5% and redeemable at par in 20 years. Mr. Simpson's desired yield rate is i2) 7%. (a) [5 marks] How much did he pay for the bond? (b) [5 marks] After exactly 5 years, he sells the bond. Interest rates have dropped and the bond is sold to yield a buyer i(2) = 6%. Determine the sale price.
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a Using a financial calculator enter PMT325 Semiannual coupon6510002 IY35 Sem... View the full answer
Related Book For
Contemporary Business Mathematics with Canadian Applications
ISBN: 978-0134141084
11th edition
Authors: S. A. Hummelbrunner, Kelly Halliday, Ali R. Hassanlou, K. Suzanne Coombs
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