3. You are given the following information about a bond: (i) Par value is 1000. (ii) Redemption value is 1000. (iii) Coupon rate 12%, convertible semi-annually. (iv) It is priced to yield 10%, convertible semi-annually. The bond has a term of n years. If the term of the bond is doubled, the price will increase by 50. Calculate the price of the n year bond.
3. You are given the following information about a bond: (i) Par value is 1000. (ii) Redemption value is 1000. (iii) Coupon rate 12%, convertible semi-annually. (iv) It is priced to yield 10%, convertible semi-annually. The bond has a term of n years. If the term of the bond is doubled, the price will increase by 50. Calculate the price of the n year bond.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 4MC
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![3. You are given the following information about a bond:
(i) Par value is 1000.
(ii) Redemption value is 1000.
(iii) Coupon rate 12%, convertible semi-annually.
(iv) It is priced to yield 10%, convertible semi-annually.
The bond has a term of n years. If the term of the bond is doubled, the price will increase by 50.
Calculate the price of the n year bond.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc82d6fc6-cd05-4bb8-8e60-bc7ed022d374%2F337f1c32-a7c4-49b5-9b7c-173367c098f1%2F47nt1t_processed.jpeg&w=3840&q=75)
Transcribed Image Text:3. You are given the following information about a bond:
(i) Par value is 1000.
(ii) Redemption value is 1000.
(iii) Coupon rate 12%, convertible semi-annually.
(iv) It is priced to yield 10%, convertible semi-annually.
The bond has a term of n years. If the term of the bond is doubled, the price will increase by 50.
Calculate the price of the n year bond.
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