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A 20 yr maturity bond with par value of $1000 makes semi-annual coupon payment at a...

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Finance

A 20 yr maturity bond with par value of $1000 makes semi-annualcoupon payment at a coupon rate of 8%. What is the effective annualyield if the bond price is $950?

The answer is 8.7%
Please show work, USING THE BA CALCULATOR. Thank you.

Answer & Explanation Solved by verified expert
3.9 Ratings (630 Votes)
Information providedPar value future value 1000Time 20 years2 40 semiannual periodCoupon rate 82 4Coupon payment 0041000 40Current    See Answer
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A 20 yr maturity bond with par value of $1000 makes semi-annualcoupon payment at a coupon rate of 8%. What is the effective annualyield if the bond price is $950?The answer is 8.7%Please show work, USING THE BA CALCULATOR. Thank you.

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