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Silvia is thinking about investing money into a bond to diversify her investments. Company X issued 12 bonds at a face value of $19000 and a 8.0% nominal interest rate paid semiannually to raise capital for an upcoming factory expansion. The face value of the bond is $19000. The bond is a 15 year bond. As the bond was issued, the current nominal interest rate in the market is 6.5% compounded monthly. What is the maximum price Silvia should be pay for a single bond from company X?

Silvia is thinking about investing money into a bond to diversify her investments. Company X issued 12 bonds at a face value of $19000 and a 8.0% nominal interest rate paid semiannually to raise capital for an upcoming factory expansion. The face value of the bond is $19000. The bond is a 15 year bond. As the bond was issued, the current nominal interest rate in the market is 6.5% compounded monthly. What is the maximum price Silvia should be pay for a single bond from company X?

Essentials Of Investments
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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Silvia is thinking about investing money into a bond to diversify her investments. Company X issued 12 bonds at a face value of $19000 and a 8.0% nominal interest rate paid semiannually to raise capital for an upcoming factory expansion. The face value of the bond is $19000. The bond is a 15 year bond. As the bond was issued, the current nominal interest rate in the market is 6.5% compounded monthly. What is the maximum price Silvia should be pay for a single bond from company X? Your Answer: Answer
Transcribed Image Text:Silvia is thinking about investing money into a bond to diversify her investments. Company X issued 12 bonds at a face value of $19000 and a 8.0% nominal interest rate paid semiannually to raise capital for an upcoming factory expansion. The face value of the bond is $19000. The bond is a 15 year bond. As the bond was issued, the current nominal interest rate in the market is 6.5% compounded monthly. What is the maximum price Silvia should be pay for a single bond from company X? Your Answer: Answer
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