Pays interest annually if yield to maturity on similar bonds

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1. Alyssa just won a law suit and plans to put the proceeds aside for her special brother so that he will have an income of $20,000 per year for the next 20 years. The account earns 6% compounded semiannually. How much should Alyssa pay for such an arrangement?

2. What is the price of a 7.6% coupon rate, with a $1000 face value bond that pays interest annually if the yield to maturity on similar bonds is 7.5%

3. The _____ premium is that portion of the bond yield that represents compensation for potential difficulties that might be encountered should the bond holder wish to sell the bond prior to maturity.

Reference no: EM131828965

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