You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 4 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 5.5% per year compounded semiannually, what will be your minimum selling price for the bond?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 4 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 5.5% per year compounded semiannually, what will be your minimum selling price for the bond?

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