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Investment banks will oftentimes "split" the interest and principal payments on US government bonds into two parts and sell each part separately. Consider a vanilla government bond with 30 years to maturity, a coupon rate of 10 percent, a face value of $5,000, and semi-annual coupon payments. What is the present value of the interest payments on this bond (not including any principal payments) if the required rate of return is 12 percent per year?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91617913

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