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Home Q & A Board Science-Related Homework Help Mathematics
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ikrabbe ikrabbe
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6 years ago
A $250 000, 6.5% bond with semi-annual coupons redeemable at par is bought 17.5 years before maturity at 78.25. What was the approximate yield rate?
Textbook 
Contemporary Business Mathematics with Canadian Applications

Contemporary Business Mathematics with Canadian Applications


Edition: 11th
Authors:
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SupremeSupreme
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6 years ago
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More solutions for this book are available here
Quoted price: 250000(0.7825) = $195 625.00
Average book value: .5(250 000 + 195 625) = $222 812.50
Semi-annual interest: 250 000(0.0325) = $8125.00
Total interest: 35(8125.00) = $284 375.00
Discount: 250000.00 - 195625.00 = $54 375.00
Average income:  (8125.00 + 284375.00) = $8357.14
Approximate value:   = .0375075
Annual rate: 2(.0375075) = 7.5015%
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ikrabbe Author
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6 years ago
Thanks
larrybrads
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Yesterday
Brilliant ツ
kamikazekota
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2 hours ago
Good timing, thanks!
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