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Bond Selling Price and Rate of Return

Lamar Baily purchased a 7% coupon corporate bond that matured in 10 years and paid interest semiannually. He paid $2800 and 6 months later, immediately following an interest payment, he sold the bond. At the time of the sale, the market interest rate on bonds of this type was 6%. What was Baily’s selling price? What was Baily’s rate of return for the 6 months? What is this return on an annual basis?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92319553

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