Question
A municipal bond is being offered for sale for $250,000. The bond pays no interest (as is the case for many municipal bonds) during its
A municipal bond is being offered for sale for $250,000. The bond pays no interest (as is the case for many municipal bonds) during its 20 year life. At the end of 20 years, the owner of the bond will receive a lump sum payment of $600,000. The bond yield is approximately
Question 1 options:
4.47%; | |||||||||||||||||||||||||||||||||||||||||
8.94% | |||||||||||||||||||||||||||||||||||||||||
41.67% | |||||||||||||||||||||||||||||||||||||||||
None of the above Calculate the present worth of a 4.5% nominal rate, $5000 bond with interest paid semiannually. The bond matures in 10 years, and the investor wants to make an 8% per year compounded quarterly on the investment. Question 2 options:
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