You have just purchased an outstanding noncallable, 15-year bond with a par value of$1,000. Assume that this bond pays interest of 7.5%, with semiannual compounding. If thegoing (nominal) annual rate is 6%, what price did you pay for this bond? How does the pricecompare to the price of the annual coupon bond?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 4P
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You have just purchased an outstanding noncallable, 15-year bond with a par value of
$1,000. Assume that this bond pays interest of 7.5%, with semiannual compounding. If the
going (nominal) annual rate is 6%, what price did you pay for this bond? How does the price
compare to the price of the annual coupon bond?

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