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A $8,000 bond had a coupon rate of 4.50% with interest paid semi-annually. Keith purchased this bond when there were 7 years left to maturity and when the market interest rate was 4.75% compounded semi-annually. He held the bond for 4 years, then sold it when the market interest rate was 4.25% compounded semi-annually.

A $8,000 bond had a coupon rate of 4.50% with interest paid semi-annually. Keith purchased this bond when there were 7 years left to maturity and when the market interest rate was 4.75% compounded semi-annually. He held the bond for 4 years, then sold it when the market interest rate was 4.25% compounded semi-annually.

Financial & Managerial Accounting
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter13: Investments And Fair Value Accounting
Section: Chapter Questions
Problem 5DQ
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c. What was Keith's gain or loss on this investment? amount was $ $0.00
Transcribed Image Text:c. What was Keith's gain or loss on this investment? amount was $ $0.00
A $8,000 bond had a coupon rate of 4.50% with interest paid semi-annually. Keith purchased this bond when there were 7 years left to maturity and when the market interest rate was 4.75% compounded semi-annually. He held the bond for 4 years, then sold it when the market interest rate was 4.25% compounded semi-annually. a. What was the purchase price of the bond? $0.00 Round to the nearest cent. b. What was the selling price of the bond? $0.00 Round to the nearest cent.
Transcribed Image Text:A $8,000 bond had a coupon rate of 4.50% with interest paid semi-annually. Keith purchased this bond when there were 7 years left to maturity and when the market interest rate was 4.75% compounded semi-annually. He held the bond for 4 years, then sold it when the market interest rate was 4.25% compounded semi-annually. a. What was the purchase price of the bond? $0.00 Round to the nearest cent. b. What was the selling price of the bond? $0.00 Round to the nearest cent.
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