Problem #3: There is a bond on a company's books with an original term of 10 years that was purchased for a premium at its issuance, just over 2 years ago. The bond pays semi-annual interest. With the receipt of the latest coupon, the corresponding amount for amortization of the premium was $158.85. Exactly one year ago, the amount for amortization of the premium was $146.02. Based on the relation between subsequent amounts for amortization of the principal, what was the original value of the premium?

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
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Problem #3: There is a bond on a company's books with an original term of 10 years that was purchased for a premium at its
issuance, just over 2 years ago. The bond pays semi-annual interest. With the receipt of the latest coupon, the
corresponding amount for amortization of the premium was $158.85. Exactly one year ago, the amount for
amortization of the premium was $146.02. Based on the relation between subsequent amounts for amortization of
the principal, what was the original value of the premium?
Transcribed Image Text:Problem #3: There is a bond on a company's books with an original term of 10 years that was purchased for a premium at its issuance, just over 2 years ago. The bond pays semi-annual interest. With the receipt of the latest coupon, the corresponding amount for amortization of the premium was $158.85. Exactly one year ago, the amount for amortization of the premium was $146.02. Based on the relation between subsequent amounts for amortization of the principal, what was the original value of the premium?
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