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Financial Technology Center - School of Business - Central Connecticut State University |
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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? Inputs: N = 10 * 2 . I = 10 / 2 . PMT = ( Par Value * The coupon rate) / F = ( 1000 * 0.12 ) / 2 = 60. FV= 1000 . Financial calculator solution Output: Price= PV= 1,124.62
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