Revision as of 21:55, 19 November 2023 by Admin (Created page with "'''Solution: D''' Let i = yield rate, r = coupon rate (if any), F = face value, P = price, n = # of years. For the first bond: <math display = "block"> \begin{array}{l}{{P=0.8F=F_{V}{}^{36}}}\\ {{0.8=\nu^{36}}}\\ {{i=0.006218}}\end{array} </math> For the second bond: <math display = "block"> P=0.8F=F\nu^{n}+{\frac{4}{9}}(0.006218)F a_{n|0.006218} \\ 0.8 = v^n + (0.0027634)a_{n|0.006218} </math> Using the BAII Plus, where PV=0.8, I/Y=.6218, PMT=0.0027634, FV=1 CPT...")
Exercise
ABy Admin
Nov 19'23
Answer
Solution: D
Let i = yield rate, r = coupon rate (if any), F = face value, P = price, n = # of years. For the first bond:
[[math]]
\begin{array}{l}{{P=0.8F=F_{V}{}^{36}}}\\ {{0.8=\nu^{36}}}\\ {{i=0.006218}}\end{array}
[[/math]]
For the second bond:
[[math]]
P=0.8F=F\nu^{n}+{\frac{4}{9}}(0.006218)F a_{n|0.006218} \\
0.8 = v^n + (0.0027634)a_{n|0.006218}
[[/math]]
Using the BAII Plus, where PV=0.8, I/Y=.6218, PMT=0.0027634, FV=1 CPT N results in n=72.
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