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    Semiannual bond

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    The Florida investment Fund buys 90 bonds of the Gator Corp. through a broker. The bonds pay 8% annual interest. The yield to maturity is 10%. The bonds have a 25 year maturity

    Using an assumption of semiannual interest payments:

    a. Compute the price of a bond .Need to calculate payments for interest then principle.

    b. Total value of 90 bonds?

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    Solution Preview

    a. The price of the bond is the present value of interest and principle. The semi annual interest is 1,000 X 8%/2 = $40, periods to maturity are 25X2 = ...

    Solution Summary

    This solution helps answer questions about semiannual bonds.