Answered: A P10, 000.00, 8-year, 7% bond that…

A P10, 000.00, 8-year, 7% bond that pays interest semi-annually is offered at 5% discount. Determine its redemption price if an investor is to realize a yield of 10% semi-annually.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 6P

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Question

A P10, 000.00, 8-year, 7% bond that pays interest semi-annually is offered at 5% discount. Determine its redemption price if an investor is to realize a yield of 10% semi-annually. (Ans. P12 457.19)

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