You are interested in investing in a five-year bond that pays a 7.8 percent coupon with interest

Question:

You are interested in investing in a five-year bond that pays a 7.8 percent coupon with interest to be received semiannually. Your required rate of return is 8.4 percent. What is the most you would be willing to pay for this bond?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...