Olivia purchased a 20-year 5% semiannual coupon bond with a face amount of $1000 that...
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Finance
Olivia purchased a 20-year 5% semiannual coupon bond with a face amount of $1000 that is callable on any coupon date in the 13thth to the 20thth year:
(i) In the 13thth to 18thth year, the bond is callable at redemption amount of $1277. (ii) In the 19thth to 20thth year, the bond is callable at redemption amount of $1070.
Find the maximum price Olivia should pay in order to ensure a minimum nominal annual rate of 4% compounded semiannually.
A 1087.36
B 1127.09
C 1163.49
D 1239.14
E 1263.24
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