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yield? Answer: The effective annual eufrem 8. th a 10-year maturity, a $1,000 par value, a 10% Suppose you purchased a corporate bond wi coupon
yield? Answer: The effective annual eufrem 8. th a 10-year maturity, a $1,000 par value, a 10% Suppose you purchased a corporate bond wi coupon rate, and semiannu al interest payments. This means that you receive a $50 interest yiment at the end of each six-month period for 10 years (20 times). Then, when the bond you will receive the principal amount (the face value) in a lump sum. Three years purchased, the going rate of interest on new bonds fell to 6% (or 6% nded semiannually). What is the current market value (P) of the bond (three years after the bonds were after its purchase)? Answer: $1,225.91
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