Question
8. Your broker is suggesting that you purchase a 20-year Industrial Business Machines bond that is...
8. Your broker is suggesting that you purchase a 20-year Industrial Business Machines bond that is selling for $9,120. The face value on the bond is $10,000 and your broker tells you that the bond has a yield to maturity of 10.7%. You are interested in knowing what type of interest payment you will receive each year while you are holding the bond. If Industrial Business Machines makes annual interest payments, what is the coupon rate on the bond and how large will each coupon interest payment be?
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Answer #1
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