A $1000 par value 4% bond with semiannual coupons matures at the
end of 10 years....
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A $1000 par value 4% bond with semiannual coupons matures at theend of 10 years. The bond is callable at $1050 at the ends of years4 through 6, at $1025 at the ends of years 7 through 9, and at$1000 at the end of year 10. Find the maximum price that aninvestor can pay and still be certain of a yield rate of 5%convertible semiannually.
ANSWER: 922.05
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In this question the redemption values are not same at all possible redemption dates However the modified coupon rates for each possible redemption period ie year 4 year 6 year 7year 9
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