A $8,500 bond had a coupon rate of 5.75% with interest paid semi-annually. Gregory purchased this bond when there were 9 years left to maturity and when the market interest rate was 6.00% compounded semi-annually. He held the bond for 4 years, then sold it when the market interest rate was 5.50% compounded semi-annually. a. Calculate the purchase price of the bond. b. Calculate the amount that Gregory received when he sold the bond

A $8,500 bond had a coupon rate of 5.75% with interest paid semi-annually. Gregory purchased this bond when there were 9 years left to maturity and when the market interest rate was 6.00% compounded semi-annually. He held the bond for 4 years, then sold it when the market interest rate was 5.50% compounded semi-annually. a. Calculate the purchase price of the bond. b. Calculate the amount that Gregory received when he sold the bond

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter6: Bonds (debt) - Characteristics And Valuation

Section: Chapter Questions

Problem 12PROB

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