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Mr. Simpson buys a $1000 bond paying interest at j 2 = 6.5% and redeemable at par in 20 years. Mr. Simpson's desired yield rate

Mr. Simpson buys a $1000 bond paying interest at j2 = 6.5% and redeemable at par in 20 years. Mr. Simpson's desired yield rate is j4 = 7%. (a) How much did he pay for the bond? (b) After 5 years he sells the bond. Interest rates have dropped and the bond is sold to buyer to yield at j1 = 5%. Determine the sale price.

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