11. A 8% $1,000 par-value bond with quarterly coupons maturing in nine years is to be replaced by a 6% $1,200 par bond with semi-annual coupons. Both bonds are priced at an 8% nominal yield rate convertible semi-annually and have the same price. In how many years should the new bond mature? Answer to the nearest half-year.
11. A 8% $1,000 par-value bond with quarterly coupons maturing in nine years is to be replaced by a 6% $1,200 par bond with semi-annual coupons. Both bonds are priced at an 8% nominal yield rate convertible semi-annually and have the same price. In how many years should the new bond mature? Answer to the nearest half-year.
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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Transcribed Image Text:11. A 8% $1,000 par-value bond with quarterly coupons maturing in nine
years is to be replaced by a 6% $1,200 par bond with semi-annual coupons. Both
bonds are priced at an 8% nominal yield rate convertible semi-annually and have the
same price. In how many years should the new bond mature? Answer to the nearest
half-year.
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