Question
Assume that you are considering the purchase of a 20-year, bond with an annual coupon rate of 9.5%. The bond has a face value of
Assume that you are considering the purchase of a 20-year, bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 7.5% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
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Public Finance and Public Policy
Authors: Jonathan Gruber
5th edition
1464143331, 978-1464143335
