Q2. A $1000 bond with a coupon rate of 9% payable semiannually is redeemable after an unspecified number of years at $1125. The bond is bought to yield 10% convertible semiannually. If the present value of the redemption value is $225 at this yield rate, find the purchase price.

Q2. A $1000 bond with a coupon rate of 9% payable semiannually is redeemable after an unspecified number of years at $1125. The bond is bought to yield 10% convertible semiannually. If the present value of the redemption value is $225 at this yield rate, find the purchase price.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Q2. A $1000 bond with a coupon rate of 9% payable semiannually is
redeemable after an unspecified number of years at $1125. The bond is
bought to yield 10% convertible semiannually. If the present value of the
redemption value is $225 at this yield rate, find the purchase price.

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