You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 6 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 10% per year compounded semiannually, what will be your minimum selling price for the bond?
You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 6 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 10% per year compounded semiannually, what will be your minimum selling price for the bond?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 6 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 10% per year compounded semiannually, what will be your minimum selling price for the bond?
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