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Don makes a one time investment in the following way: he purchases a 30 year, $5,000 face value bond with semiannual coupons, and with a
Don makes a one time investment in the following way: he purchases a 30 year, $5,000 face value bond with semiannual coupons, and with a semiannual 4% coupon rate and a semiannual 6% yield rate. Immediately after receiving his coupons, he invests his coupons into an account earning a nominal semiannual interest rate of i(2) = 3%. Find how much is in the account after 30 years and find Dons nominal semiannual yield rate (i.e. the equivalent nominal semiannual rate i(2) ) for the 30 year period.
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