1, (10 pts) What is the value of a 6% nominal interest rate with interest payments semi- annually, 5-year bond with a face value of $1,000 that pays dividends semi-annually, if the purchaser wishes to earn a 7% nomin return? al interest (compounded semi-annually)
Par value of bonds 1000 Stated rate of interest 6% Semi Annual interest (1000*6%*6/12) 30 Annuity factor for 10 periods at 3.5% 8.3166 Present value factor at 3.5% for Period-10 0.7089 Present value of Interest rececived 249.498 Present value of maturity value 708.9 Issue price 958.4 Value of bonds shall be $ 958.40
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