Revision as of 22:46, 19 November 2023 by Admin (Created page with "'''Solution: C''' Let <math>r</math> be the coupon rate. <math display="block"> \begin{aligned} & 2300=2000 r a_{\overline{20}|0.07}+2000 v^{20} \\ & 2000 r=168.32 \end{aligned} </math> Bond is bought at a premium, so assume called as early as possible at year 18 . <math display="block"> \begin{aligned} & P=168.32 a_{\overline{18}|0.07}+2000 v^{18} \\ & P=2284.85 \end{aligned} </math> {{soacopyright | 2023 }}")
Exercise
ABy Admin
Nov 19'23
Answer
Solution: C
Let [math]r[/math] be the coupon rate.
[[math]]
\begin{aligned}
& 2300=2000 r a_{\overline{20}|0.07}+2000 v^{20} \\
& 2000 r=168.32
\end{aligned}
[[/math]]
Bond is bought at a premium, so assume called as early as possible at year 18 .
[[math]]
\begin{aligned}
& P=168.32 a_{\overline{18}|0.07}+2000 v^{18} \\
& P=2284.85
\end{aligned}
[[/math]]
Copyright 2023 . The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.