Effective annual yield remained unchanged

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1. (a) Suppose a 6 percent coupon, $1,000 bond with eight years left to maturity is selling for $1,100. What is the yield, assuming that interest is paid quarterly?

(b) If, in part (a), the 6 percent coupon was paid semi-annually on the bond, what would the bond sell for, given that the annual yield remained unchanged [i.e., the investor wants the same annual yield as in (a)]?

(c) If, in part (a), the 6 percent coupon was paid monthly on the bond, what would the bond sell for, given that the effective annual yield remained unchanged [i.e., the investor wants the same effective annual yield as in (a)]

Reference no: EM132390817

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