Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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10. An investor purchased a 15-year par value bond with semiannual coupons of 50 and
a redemption value of 1,200. The bond can be called at 1,400 on any coupon date
prior to maturity, starting at the end of year 10.
Calculate the maximum price of the bond that guarantees that the investor will earn
an annual nominal interest rate of at least 6% convertible semiannually.
a. 1,519
b. 1,504
c. 1,489
d. 1,474
e. 1,459
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Transcribed Image Text:10. An investor purchased a 15-year par value bond with semiannual coupons of 50 and a redemption value of 1,200. The bond can be called at 1,400 on any coupon date prior to maturity, starting at the end of year 10. Calculate the maximum price of the bond that guarantees that the investor will earn an annual nominal interest rate of at least 6% convertible semiannually. a. 1,519 b. 1,504 c. 1,489 d. 1,474 e. 1,459
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