Semiannual interest = $1,000 * 0.095 * 6/12 = $47.50
The price of the bond is:
Current bond price = $47.50(PVIFA 4.9%,40) + $1,000(PVIF 4.9%,40)
Current bond price = ($47.50 * 17.3966526883) + ($1,000 * 0.14756401797)
Current bond price = $973.91
Assume that you are considering the purchase of a 20-year bond with an annual coupon rate...
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Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 10.7% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
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