Ms. Jones wants to make 6% nominal interest compounded quarterly on a bond investment. She has an opportunity to purchase a 4%, $10,000 bond that will mature in 16 years and pays quarterly interest. This means that she will receive quarterly interest payments on the face value of the bond ($10,000) at 4% nominal interest. After 16 years she will receive the face value of the bond. How much should she be willing to pay for the bond today? Ms. Jones should be willing to pay $ for the bond today. (Round to the nearest dollar.)
Ms. Jones wants to make 6% nominal interest compounded quarterly on a bond investment. She has an opportunity to purchase a 4%, $10,000 bond that will mature in 16 years and pays quarterly interest. This means that she will receive quarterly interest payments on the face value of the bond ($10,000) at 4% nominal interest. After 16 years she will receive the face value of the bond. How much should she be willing to pay for the bond today? Ms. Jones should be willing to pay $ for the bond today. (Round to the nearest dollar.)
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:Ms. Jones wants to make 6% nominal interest compounded quarterly on a bond investment. She has an opportunity to purchase a 4%, $10,000 bond that will mature in 16 years and pays quarterly interest. This means that she will receive quarterly interest
payments on the face value of the bond ($10,000) at 4% nominal interest. After 16 years she will receive the face value of the bond. How much should she be willing to pay for the bond today?
Ms. Jones should be willing to pay $ for the bond today. (Round to the nearest dollar.)
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