Asked by Bernadine Franklin on May 10, 2024
Verified
A $5000 strip bond was purchased for $3054.29, providing the investor with a return of 3.9% compounded semiannually until the maturity date. To the nearest day, how long before the maturity date was the bond purchased?
Strip Bond
A type of bond where the principal and regular coupon payments have been separated and are sold individually.
Compounded Semiannually
Interest calculated twice a year on the initial principal and previously earned interest.
Investment Yield
The profits made from an investment during a specified timeframe, represented as a proportion of the original investment's value.
- Acquire knowledge on the procedure to ascertain the time frame until bond maturity by employing compound interest computation and specifics of buying the bond.
Verified Answer
TH
Learning Objectives
- Acquire knowledge on the procedure to ascertain the time frame until bond maturity by employing compound interest computation and specifics of buying the bond.