You have just purchased an outstanding noncallable, 15-year bond with a par value of$1,000. Assume that this bond pays interest of 7.5%, with semiannual compounding. If thegoing (nominal) annual rate is 6%, what price did you pay for this bond? How does the pricecompare to the price of the annual coupon bond?

You have just purchased an outstanding noncallable, 15-year bond with a par value of$1,000. Assume that this bond pays interest of 7.5%, with semiannual compounding. If thegoing (nominal) annual rate is 6%, what price did you pay for this bond? How does the pricecompare to the price of the annual coupon bond?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 4MC

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You have just purchased an outstanding noncallable, 15-year bond with a par value of
$1,000. Assume that this bond pays interest of 7.5%, with semiannual compounding. If the
going (nominal) annual rate is 6%, what price did you pay for this bond? How does the price
compare to the price of the annual coupon bond?

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