Question
Teressa purchases a 5-year 1000000 bond with coupons at 6% convertible semiannually. Lei purchases a 10-year bond with par value X and coupons at 6%
Teressa purchases a 5-year 1000000 bond with coupons at 6% convertible semiannually. Lei purchases a 10-year bond with par value X and coupons at 6% convertible semiannually. Both bonds are redeemable at par and both are purchased to yield a nominal annual rate of 4% compounded semiannually. Supposes that immediately after purchasing the bonds, both Teressa and Lei sell their bonds to an investor who ends up yielding a nominal annual rate of 2% compounded semiannually. If Teressa and Lei both earn the same amount of profit, find X. No other information is available.
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