A bond pays 7% annual interest in semiannual payments for 10 years. The current yield on similar bonds is 9%. To determine the market value of this bond, you must
A) find the interest factors (IFs) for 20 periods at 3.5%.
B) find the interest factors (IFs) for 10 periods at 7%.
C) find the interest factors (IFs) for 10 periods at 9%.
D) find the interest factors (IFs) for 20 periods at 4.5%.

Question

Quizplus · Accepted Answer

I = 9%/2 = 4.5% n = 10 years × 2 = 20 periods

A Bond Pays 7% Annual Interest in Semiannual Payments for 10