BUS 225 DAYONE LL
BUS 225 DAYONE LL
17th Edition
ISBN: 9781264116430
Author: BLOCK
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 10, Problem 22P

For the next two problems, assume interest payments are on a semiannual basis.

You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 10 percent, which is paid semiannually. The yield to maturity on the bonds is 10 percent annual interest. There are 15 years to maturity.

a. Compute the price of the bonds based on semiannual analysis.

b. With 10 years to maturity, if yield to maturity goes down substantially to 8 percent, what will be the new price of the bonds?

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BUS 225 DAYONE LL

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Bonds Explained for Beginners | Bond Types 101; Author: TommyBryson;https://www.youtube.com/watch?v=yuKmHTgqZ5o;License: Standard Youtube License