You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 5 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 4% per year compounded semiannually, what will be your minimum selling price for the bond? $

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You have just purchased a municipal bond with a
$10,000 par value for $9,500. You purchased it
immediately after the previous owner received a
semiannual interest payment. The bond rate is 6.6%
per year payable semiannually. You plan to hold the
bond for 5 years, selling the bond immediately after
you receive the interest payment. If your desired
nominal yield is 4% per year compounded
semiannually, what will be your minimum selling
price for the bond? $
Carry all interim calculations to 5 decimal places
and then round your final answer to the nearest
dollar. The tolerance is ±5.
Transcribed Image Text:You have just purchased a municipal bond with a $10,000 par value for $9,500. You purchased it immediately after the previous owner received a semiannual interest payment. The bond rate is 6.6% per year payable semiannually. You plan to hold the bond for 5 years, selling the bond immediately after you receive the interest payment. If your desired nominal yield is 4% per year compounded semiannually, what will be your minimum selling price for the bond? $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±5.
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