What price should be paid for a $10,000 Government of Ontario strip bond with 17 years remaining to maturity if it is to yield the buyer 2.770% compounded semiannually?

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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• What price should be paid for a $10,000 Government
of Ontario strip bond with 17 years remaining to
maturity if it is to yield the buyer 2.770%
compounded semiannually?
• A trust company pays 5.375% compounded annually
on its five-year GICS. What semi-annually
compounded interest rate would produce the same
maturity value?
• When discounted to yield 9.5% compounded
quarterly, a $4500 four-year promissory note bearing
interest at 11.5% compounded semiannually was
priced at $5697.84. How long after the issue date did
the discounting take place?
Transcribed Image Text:• What price should be paid for a $10,000 Government of Ontario strip bond with 17 years remaining to maturity if it is to yield the buyer 2.770% compounded semiannually? • A trust company pays 5.375% compounded annually on its five-year GICS. What semi-annually compounded interest rate would produce the same maturity value? • When discounted to yield 9.5% compounded quarterly, a $4500 four-year promissory note bearing interest at 11.5% compounded semiannually was priced at $5697.84. How long after the issue date did the discounting take place?
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