If a 20-year bond pays interest of 8 percent semiannually,the present value of the bond is calculated based upon (1)4 percent and 40 periods for the interest,and (2)8 percent and 20 periods for the face amount of the bond.

Question

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The present value of the bond is calculated using 4 percent for 40 periods for both the interest payments and the face amount, as the interest is compounded semiannually.

If a 20-Year Bond Pays Interest of 8 Percent Semiannually,the