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Daria purchases a 10 -year bond redeemable at par with a face value of $1,000. The bond pays semiannual coupons at a nominal rate of
Daria purchases a 10 -year bond redeemable at par with a face value of $1,000. The bond pays semiannual coupons at a nominal rate of 7% per year and has a nominal yield of 5%, convertible semiannually. She reinvests the coupon payments in a fund that pays a nominal rate of 3%, convertible semiannually. Daria borrows the full purchase price of the bond and repays the entire principal and interest in a lump-sum payment after 10 years. The loan has an annual effective interest rate of 4%. Find her net dollar gain after 10 years. (A) 0.00 (B) 98.33 (C) 196.67 (D) 555.11 (E) 653.44 Daria purchases a 10 -year bond redeemable at par with a face value of $1,000. The bond pays semiannual coupons at a nominal rate of 7% per year and has a nominal yield of 5%, convertible semiannually. She reinvests the coupon payments in a fund that pays a nominal rate of 3%, convertible semiannually. Daria borrows the full purchase price of the bond and repays the entire principal and interest in a lump-sum payment after 10 years. The loan has an annual effective interest rate of 4%. Find her net dollar gain after 10 years. (A) 0.00 (B) 98.33 (C) 196.67 (D) 555.11 (E) 653.44
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