Last month Jim purchased $10,000 of U.S. Treasury bonds (their face value was $10,000). These bonds have a 30-year maturity period, and they pay 1.5%interest every three months (i.e., the APR is 6%, and Jim receives a check for $150 every three months). But interest rates for similar securities have since risen to a 7% APR because of interest rate increases by the Federal ReserveBoard. In view of the interest-rate increase to 7%, what is the current value of Jim’s bonds?
Last month Jim purchased $10,000 of U.S. Treasury bonds (their face value was $10,000). These bonds have a 30-year maturity period, and they pay 1.5%interest every three months (i.e., the APR is 6%, and Jim receives a check for $150 every three months). But interest rates for similar securities have since risen to a 7% APR because of interest rate increases by the Federal ReserveBoard. In view of the interest-rate increase to 7%, what is the current value of Jim’s bonds?
Chapter2: The Domestic And International Financial Marketplace
Section: Chapter Questions
Problem 3P
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Last month Jim purchased $10,000 of U.S. Treasury bonds (their face value was $10,000). These bonds have a 30-year maturity period, and they pay 1.5%
interest every three months (i.e., the APR is 6%, and Jim receives a check for $150 every three months). But interest rates for similar securities have since risen to a 7% APR because of interest rate increases by the Federal Reserve
Board. In view of the interest-rate increase to 7%, what is the current value of Jim’s bonds?
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