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| rev | Admin | (Created page with "'''Solution: E''' Since bond rate is less than yield, the bond was bought at a discount. Thus the issuer wishes the coupon payments to continue as long as possible. So we must assume that the bond will be redeemed in 20 years <math>=40</math> periods. The coupon rate is <math>r=.03</math> per half year and the yield rate is <math>j=.04</math> per half year. Thus <math>P=X v_j^{40}+X r a_{\overline{40} \mid}</math> so <math display="block"> \begin{aligned} & 1722.25=X\l...") | Nov 29'23 at 20:53 | +866 |