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QUESTION

Jphn purchases a corporate bond With par-value 50000 on January 1ll 2000. The bond pays cpupclns at an annual rate of 190 campaunded semiannually...

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Jphn purchases a corporate bond With par-value 50000 on January 1ll 2000. The bond pays cpupclns at an annual rate of £190 campaunded semiannually every July 1 [middlel and January 1 lendfstart ofyear}. The first muppn payment ccrmes on July 1, 1000. The hand matures at par an January 1, 2010 {Le immediately after the 20"" ceupen payment}, and the hand is eriginally priced ta yield an annualrate of 0% ccrrnpcunded semiannually. 0n April 1. 2005. Jahn sells the band at a price of X which is 5% more than the band’s calculatedMarket Price [i.e. dean price] at this time. Find-3f. Hate: Between January 1, 2005 {eeupen payment date] and April 1, 2005 {bend sale date} a tetal ef three months has passed. Between January ‘Jr 2005 {ceupen payment date} and July 1, 2005 {cpupcnpayment date] a tatal of six months has passed. The exact lengths of each of the manths are not equivalent; heweyer, in the grand scheme at things. the differences are negligible. {all #5115 {0] 4?5?0 [Ci 43112 [ti] 43:80 {E} 49262
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