Finance question with bonds
An investor owns a 1000 par value 10% bond with semiannual coupons. The
bond will mature at par at the end of 10 years. The investor decides that
an 8-year bond would be preferable. Current yield rates are 7% convertible
semiannually. The investor uses the proceeds from the sale of the 10% bond
to purchase a 6% bond with semiannual coupons, maturing at par at the end
of 8 years. Find the par value of the 8-year bond.
may want to use this resource https://archive.org/details/theoryofinterest00kell/page/1/mode/1up?view=theater
Markgvanzalk
96
Answer
Answers can only be viewed under the following conditions:
- The questioner was satisfied with and accepted the answer, or
- The answer was evaluated as being 100% correct by the judge.
1 Attachment
Kav10
2.1K
The answer is accepted.
Join Matchmaticians Affiliate Marketing
Program to earn up to a 50% commission on every question that your affiliated users ask or answer.
- answered
- 782 views
- $12.00
Related Questions
-
A fund pays 1 at time t = 0, 2 at time t = 2n and 1 at time t = 4n. The
present value of the payments is 3.61. Calculate $(1 + i)^n$. - Black Scholes Calculation
-
Mathematical finance question on Portfolio
and Investment Year Methods(question attached below) - Kelly Criterion for an example
- Amortization Table
- Optimal Control - Calculus of Variations
-
You are given:
(i) X is the current value at time 2 of a 20-year annuity-due of $1 per annum.
(ii) The annual effective interest rate for year t is (1/(8+t)).
Find X. - Year 12 Finance - Combining Superannuation and withdrawals
