A $5,000 bond, redeemable at 105 on Sep. 1, 2014, has semiannual coupons at j2 =...
A $5,000 bond, redeemable at 105 on Sep. 1, 2014, has semiannual coupons at j2 = 2r. It is purchased for $5,203.69 on March 1, 1993, to yield j2 = 12.5%. Find r.
Homework Answers
Face Value= $5,000
Rate of Redemption is given as 105
Therefore, Redemption value= $5,000*105% = $5,250
Date of purchase= March 1, 1993
Date of maturity= September 1, 2014.
Therefore, number of coupon payments till maturity= 43
Amount of semi annual coupon payment= $325 (Calculated using PMT function of Excel)
Semi annual coupon rate (r)= 6.5%
Details of computation as follow:
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A $5,000 bond, redeemable at 105 on Sep. 1, 2014, has semiannual
coupons at j2 =...
1. A $5,000 bond, redeemable at 105 on Sep. 1, 2014, has semiannual coupons at j2...
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