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    Bond purchase

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    Bakersfield Co. 8.5s16 bonds pay interest semiannually, and are quoted in the WSJ ad 88 1/2. If your rate of return is 10%, would you buy these bonds in 2001 and what is the total amt.

    Please show the calculations to get the answer.

    Question about bonds purchase or not?
    Bakersfield Co. 8.5s16 bonds pay interest semiannually, and are quoted in the WSJ ad 88 1/2. If your rate of return is 10%, would you buy these bonds in 2001 and what is the total amt

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    Coupon bonds and interest question?
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    Bond paying interest semiannually?
    A bod pays interest semiannually and will mature after 6 yr. The required rate of return by the bondholders is 14% per annum, and the face amt of the bond is $1000. If th market price of the bond is $920.60, find its coupon rate.

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    Solution Preview

    I recommend that you use Excel or a financial calculator to solve such problems. In the absence of a financial calculator, I'll show you the formulas in Excel.
    We need to calculate the rate of return implied by the current price. We buy the bond if the rate of return is greater than our required rate of return.
    In ...

    Solution Summary

    The solution is very easy to understand and concise. It is an excellent response for students who want to understand the concepts and then use the same concepts to solve similar problems in the future. Overall, an excellent response. The solution provides the necessary steps which are easy to follow.

    $2.19

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