Revision as of 21:12, 19 November 2023 by Admin (Created page with "A ten-year bond with a face amount of 1000, a redemption value of C, and an annual coupon rate of 7% paid semiannually is purchased at a discount to yield an annual nominal rate of 7.5%, convertible semiannually. The accumulation of discount in the 12th coupon is 7. Calculate C. <ul class="mw-excansopts"><li>673</li><li>799</li><li>1193</li><li>1344</li><li>1540</li></ul> {{soacopyright | 2023 }}")
ABy Admin
Nov 19'23
Exercise
A ten-year bond with a face amount of 1000, a redemption value of C, and an annual coupon rate of 7% paid semiannually is purchased at a discount to yield an annual nominal rate of 7.5%, convertible semiannually. The accumulation of discount in the 12th coupon is 7.
Calculate C.
- 673
- 799
- 1193
- 1344
- 1540
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.
ABy Admin
Nov 19'23
Solution: C
[[math]]\begin{aligned} & 7=P_{12}=C(i-g) v^{20-12+1} \\ & 7=[C i-C g]\left(\frac{1}{0.0375}\right)^9 \\ & 9.7497=C i-F r \\ & 9.7497=C(0.0375)-35 \\ & C=1193.33\end{aligned}[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.