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Ten bonds are purchased for $9,083.25 and are kept for 5 years. The bond coupon rate is 5% per year, payable annually. Immediately following the owner's receipt of the last coupon payment, the owner sells each bond for $50 less than its par value (price discount). The owner will invest in the bonds if the effective annual yield is at least 7%. What is the face value of the the ten bonds?

Ten bonds are purchased for $9,083.25 and are kept for 5 years. The bond coupon rate is 5% per year, payable annually. Immediately following the owner's receipt of the last coupon payment, the owner sells each bond for $50 less than its par value (price discount). The owner will invest in the bonds if the effective annual yield is at least 7%. What is the face value of the the ten bonds?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 16P
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Ten bonds are purchased for $9,083.25 and are kept for 5 years. The bond coupon rate is 5% per year, payable annually. Immediately following the owner's receipt of the last coupon payment, the owner sells each bond for $50 less than its par value (price discount). The owner will invest in the bonds if the effective annual yield is at least 7%. What is the face value of the the ten bonds?
Transcribed Image Text:Ten bonds are purchased for $9,083.25 and are kept for 5 years. The bond coupon rate is 5% per year, payable annually. Immediately following the owner's receipt of the last coupon payment, the owner sells each bond for $50 less than its par value (price discount). The owner will invest in the bonds if the effective annual yield is at least 7%. What is the face value of the the ten bonds?
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