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McCurdy Co.'s Class Q bonds have a 12-year maturity, $1,000 par value, and a 9.5% coupon...

McCurdy Co.'s Class Q bonds have a 12-year maturity, $1,000 par value, and a 9.5% coupon paid semiannually (4.75% each 6 months), and those bonds sell at their par value. McCurdy's Class P bonds have the same risk, maturity, and par value, but the p bonds pay a 9.5% annual coupon. Neither bond is callable. At what price should the annual payment bond sell?

Select the correct answer.

a. $1,003.77
b. $977.57
c. $984.12
d. $990.67
e. $997.22
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Answer #1

1,000 9.5% 95 10 12 A Par value (FV) B Coupon rate C Number of compounding periods per year D = AxB/C Interest per period (PM

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