What is the present value or worth of the bond

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Jimmy has a bond with a $1,000 face value and a coupon rate of 8.5% paid semiannually. It has a five-year life.

Problem 1: If investors are willing to accept a 12 percent rate of return on bonds of similar quality, what is the present value or worth of this bond? Show your work.

Problem 2: What is the impact of paying interest semi-annually rather than annually? Explain.

Reference no: EM132898721

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