3EDCYou buy a bond for $1,050 that pays $30 interest every 6 months. It will reach maturity in 9 years at which time it will return itsface value of $1000 plus the final $20 interest payment. What is the pre-tax annual rate of return on this bond? Estimate to 2decimal places.#F44Upload Choose a FileRF$VF55%TGF6BQ SearchF7 C6 AYH7F8&UF98*JEM88-KLGF109AI(O<TAFF11 -L0 )F12 +P;A:Prt ScScrLk=[ {/?Ins+DelBackspace] }PgUp1HomeNumLkEnterPgDnEndShiftI7 Home44PauseBreak810:33 AM3/23/2023 2★51 End9 PgUp12

It is given that Current Price of the bond =$1050, Coupon = $30 every six month (2 times in a…

Answered: nal $20 interest pa

Business

Finance

nal $20 interest pa

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 5P

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

3
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You buy a bond for $1,050 that pays $30 interest every 6 months. It will reach maturity in 9 years at which time it will return its
face value of $1000 plus the final $20 interest payment. What is the pre-tax annual rate of return on this bond? Estimate to 2
decimal places.
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Step 1 This question is related to find YTM of the bond, based on given parameters.

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