Question #120110

1. A $4,000 , 12% bond will be redeemed on

May 1,2008. Interest is payable semiannually

on May 1 and November 1.

Find the purchase price of the bond if the date of purchase is May 1, 1998 and

the yield rate is 10% compounded semi-annually.

May 1,2008. Interest is payable semiannually

on May 1 and November 1.

Find the purchase price of the bond if the date of purchase is May 1, 1998 and

the yield rate is 10% compounded semi-annually.

Expert's answer

"CF=\\frac{4000\\times0.12}{2}=240"

N=4000

rates from the table of discounts and multiples

"P=CF\\times(FM4(\\frac{r}{2};2\\times n)+N\\times(FM2(\\frac{r}{2};2\\times n)=240\\times(FM4(5;20)+N\\times(FM2(5;20)=240\\times12.462+4000\\times0.377=2 990,88+1508=4498.88"

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