A 6-year bond that pays 8% interest semiannually sells at par $1000. Another 6-year bond of equal risk pays 8%interest annually. Both bonds are noncallable and have a face value of $1000. What is the price of the bond that pays annual interest?
The answer is $992.64.
How did they get it? Can you please show all work?
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The bond that pays 8% interest semiannually sells at par $1000
which means the interest rate of the bond is ...
The price of the bond that pays annual interest is determined.