An n-year bond with semi-annual coupon payments has the following characteristics:• Par value is $100.• Redemption value is 105% of par.• Semi-annual coupon rate is r.• Semi-annual yield rate is i.• Price of the bond is $64.34.You are also given: (1+ i)-" = 0.3878Calculate(A) 0.57(B) 0.87(C) 1.16(D) 1.46(E) 1.75

Price of bond is sum of present value of coupon and present value of par value.

Answered: • Par value is $100. • Redemption value…

• Par value is $100. • Redemption value is 105 • Semi-annual coupon rate Semi-annual yield rate is • Price of the bond is $64.3 are also given: (1 + i)¯" Iculate - (A) 0.57

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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Question

An n-year bond with semi-annual coupon payments has the following characteristics:
• Par value is $100.
• Redemption value is 105% of par.
• Semi-annual coupon rate is r.
• Semi-annual yield rate is i.
• Price of the bond is $64.34.
You are also given: (1+ i)-" = 0.3878
Calculate
(A) 0.57
(B) 0.87
(C) 1.16
(D) 1.46
(E) 1.75

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