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Big Insurance Corporation's bonds have a 30-year maturity, a 0% coupon rate with interest paid semiannually, and a par value of $1,000. Note that you
Big Insurance Corporation's bonds have a 30-year maturity, a 0% coupon rate with interest paid semiannually, and a par value of $1,000. Note that you should still use semi-annual compounding when you compute the bond's intrinsic value even though the bonds pay no coupon interest. The nominal required rate of return on these bonds is 4.75%. What is the bond's intrinsic value, or what should they be selling for?
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