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Dorothy purchases a 1000 par value 10-year bond with 9% semiannual coupons for 925. She has...

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Question

Basic Math

Dorothy purchases a 1000 par value 10-year bond with 9%semiannual coupons for 925. She has found a place to invest hercoupons at a nominal rate of 7% convertible semiannually. Calculateher nominal annual yield rate convertiblesemiannually over the ten-year period .

A.

8.1%

B.

9.6%

C.

10.2%

D.

9.4%

E.

9.2%

Answer & Explanation Solved by verified expert
3.5 Ratings (386 Votes)
Hence the correct answer is the last option ie option E 92 Semi annual coupon payments 9 2 Par value 45 x 1000 45 All the coupons are reinvested at the    See Answer
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