An analyst finds that the semiannual interest rate that equates the present value of the bonds cash

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An analyst finds that the semiannual interest rate that equates the present value of the bond’s cash flow to its current market price is 3.85 percent. Consider the following possible alternatives:

I. The bond equivalent yield on this security is 7.70 percent.

II. The effective annual yield on the bond is 7.85 percent.

III. The bond’s yield to maturity is 7.70 percent.

IV. The bond’s horizon return is 8.35 percent.

Which of these alternatives are true?

a. I and II only

b. II, III, and IV only

c. I, II, and III only

d. III only.

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Fundamentals Of Investments Valuation And Management

ISBN: 9781266824012

10th Edition

Authors: Bradford Jordan, Thomas Miller, Steve Dolvin

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Question Posted: Dec 30, 2023 01:37 AM

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An analyst finds that the semiannual interest rate that equates the present value of the bonds cash

Question:

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The correct answer is c I II and III only Lets analyze each option I The bond equivalent yield on th...View the full answer

Fundamentals Of Investments Valuation And Management

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