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8. Joann buys a ten-year 10,000 floating rate par value bond with annual coupons. She knows the coupons will be level at 6.5% for the first five years, and then increase by a factor of 1.04 every year. a. Find the price for this bond if she wants a yield rate of at least 7% per annum for the ten-year period. b. Find the amount of interest paid in the fifth coupon. c. Find the amount of principal in the fourth coupon.

8. Joann buys a ten-year 10,000 floating rate par value bond with annual coupons. She knows the coupons will be level at 6.5% for the first five years, and then increase by a factor of 1.04 every year. a. Find the price for this bond if she wants a yield rate of at least 7% per annum for the ten-year period. b. Find the amount of interest paid in the fifth coupon. c. Find the amount of principal in the fourth coupon.

Essentials Of Investments
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
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8. Joann buys a ten-year 10,000 floating rate par value bond with annual coupons. She knows the coupons will be level at 6.5% for the first five years, and then increase by a factor of 1.04 every year. a. Find the price for this bond if she wants a yield rate of at least 7%per annum for the ten-year period. b. Find the amount of interest paid in the fifth coupon. c. Find the amount of principal in the fourth coupon.
Transcribed Image Text:8. Joann buys a ten-year 10,000 floating rate par value bond with annual coupons. She knows the coupons will be level at 6.5% for the first five years, and then increase by a factor of 1.04 every year. a. Find the price for this bond if she wants a yield rate of at least 7%per annum for the ten-year period. b. Find the amount of interest paid in the fifth coupon. c. Find the amount of principal in the fourth coupon.
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