If your nominal annual required rate of return is 10 percent with semiannual compounding, showing the computations how much should you be willing to pay for this bond?
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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, showing the computations how much should you be willing to pay for this bond?
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Value of bond = PV of interest payment + PV of face value on redemption
=Coupon Interest ...
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