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A $100 000, 4% Bond with Semi-Annual Coupons Is Redeemable

Question 8

Essay

A $100 000, 4% bond with semi-annual coupons is redeemable at 108. What is the purchase price to yield 5.5% compounded semi-annually seven years before maturity?

Correct Answer:

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FV = $100 000(1.08) = $108 000...

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