Bond has a face value of ₡3000 and pays coupon of 12% per annum for 4 years, if the  market interest rate is 16%. How much will you pay for this bond. If the coupon was to be  paid semi- annually will your answer be different.

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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a) Bond has a face value of ₡3000 and pays coupon of 12% per annum for 4 years, if the 
market interest rate is 16%. How much will you pay for this bond. If the coupon was to be 
paid semi- annually will your answer be different.

b) A U.S. investor obtains Ghana cedis when the cedi is worth $.33 and invests in a one-year 
money market security that provides a yield (in cedis) of 24%. At the end of one year, the 
investor converts the proceeds from the investment back to dollars at the prevailing spot 
rate of $.26. What is the effective yield earned by this foreign investor?

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