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A $ 1 , 0 0 0 par value bond was issued 3 0 years ago at an 1 1 percent coupon rate. It currently
A $ par value bond was issued years ago at an percent coupon rate. It currently has years remaining to maturity. Interest rates on similar debt obligations are now percent. Use Appendix B and Appendix DRound PV Factor" ro decimal places. Do not round intermediate calculations. Round the final answers to decimal places.
a Compute the current price of the bond using an assumption of semiannual payments.
Price of the bond
$
b If Mr Mitchell initially bought the bond at par value, what is his percentage loss or gainInput the amount as positive value.
Percenta
c Now assume Mrs Gordon buys the bond at its current market value and holds it to maturity, what will be her percentage return? Input the amount as positive value.
Percentage
d Although the same dollar amounts are involved in parts and explain why the percentage gain is larger than the percentage loss.
Investment is larger
Investment is smaller
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