Review problem on purchased bonds

Reference no: EM131773655

Question: Tom and Jack purchased bonds on the same day. Both bonds are redeemable at par and have a yield of i = 6% and a face value of $10,000.

(a) If Tom's bond pays annual coupons at the rate of 8% and it has 15 years to maturity, then how much does he pay for it?

(b) If Jack's bond has 10 years to maturity and he pays $11,487.75 for it, then what is the annual coupon rate?

Reference no: EM131773655

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