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Investor a Buys a $10,000 Bond,redeemable at Par in 15-Years

Question 89

Multiple Choice

Investor A buys a $10,000 bond,redeemable at par in 15-years and paying semi-annual coupons at j2 = 5%.Investor A pays $P for this bond.She immediately strips the coupons from the bond and sells them to investor B who wishes to yield j2 = 5.5%.She then immediately sells the strip bond to investor C who wishes to yield j2 = 5.25%.If investor A makes a profit of $270 by selling the coupons and the strip bond,what is the value of P?


A) Less than $9350
B) At least $9350,but less than $9600
C) At least $9600,but less than $9850
D) At least $9850

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