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Dominique LeBlanc is the owner of a new ten-year $50,000 8% par-value bond with a Bermuda option and annual coupons. Allowable call dates are at
Dominique LeBlanc is the owner of a new ten-year $50,000 8% par-value bond with a Bermuda option and annual coupons. Allowable call dates are at the ends of years 6 through 10, and the call premium at the end of year n is $300(10 n). Dominique purchased the bond for $51,248. (a) Find the lowest yield that Dominique may receive during the period she holds the bond as well as the highest. (b) Upon receipt, Dominique deposits each coupon and the redemp- tion amount in an account earning 6%. Find the lowest yield that Dominique may receive during the ten-year period and also the highest. Dominique LeBlanc is the owner of a new ten-year $50,000 8% par-value bond with a Bermuda option and annual coupons. Allowable call dates are at the ends of years 6 through 10, and the call premium at the end of year n is $300(10 n). Dominique purchased the bond for $51,248. (a) Find the lowest yield that Dominique may receive during the period she holds the bond as well as the highest. (b) Upon receipt, Dominique deposits each coupon and the redemp- tion amount in an account earning 6%. Find the lowest yield that Dominique may receive during the ten-year period and also the highest
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