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Maximizing Profit: Semiannual Interest Payments

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Bond Value - Semiannual Payment

Assume that you wish to purchase a 25-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $45. If you require a 7 percent nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?

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Solution Summary

This solution provides the necessary formula and calculations required to determine the maximum price you should be willing to pay for a 25-year bond with a $1000 maturity value. This is all completed in a clear and concise 130 word response.

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Bond value - semiannual payment

Assume that you wish to purchase a 25-year bond that has a maturity value of $1,000 and makes semiannual interest payments of $45. If you require a 7 percent nominal ...

Purchase this Solution


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