You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? Select one: O a. $1,124.62 O b. $1,086.15 O c. $ 957.50 O d. $826.31 O e. $1,032.20

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 11P
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You intend to purchase a 10-year, $1,000 face value bond that pays
interest of $60 every 6 months. If your nominal annual required rate
of return is 10 percent with semiannual compounding, how much
should you be willing to pay for this bond?
Select one:
O a.
$1,124.62
O b. $1,086.15
O c. $ 957.50
O d. $826.31
O e. $1,032.20
Transcribed Image Text:You intend to purchase a 10-year, $1,000 face value bond that pays interest of $60 every 6 months. If your nominal annual required rate of return is 10 percent with semiannual compounding, how much should you be willing to pay for this bond? Select one: O a. $1,124.62 O b. $1,086.15 O c. $ 957.50 O d. $826.31 O e. $1,032.20
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