A Montana state bond can be converted to $1,000 within 5 years of purchase. If the Montana bonds are comparable to Wyoming bonds that pay 5% compounded annually, determine the price of the Montana bonds. They are zero coupon bonds.

A Montana state bond can be converted to $1,000 within 5 years of purchase. If the Montana bonds are comparable to Wyoming bonds that pay 5% compounded annually, determine the price of the Montana bonds. They are zero coupon bonds.

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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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

A Montana state bond can be converted to
$1,000 within 5 years of purchase. If the
Montana bonds are comparable to Wyoming
bonds that pay 5% compounded annually,
determine the price of the Montana bonds.
They are zero coupon bonds.

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