Actuarial Exam 2/FM Prep: Find and Compare Bond Prices, Redeemable at Par

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Financial Math for Actuarial Exam 2 (FM), Video #88. Exercise #4.1.1 from "Mathematics of Investment and Credit", 6th Edition, by Samuel A. Broverman

Exercise #4.1.1: Find the prices of the following bonds, all redeemable at par. Show how to compare their prices without actually calculating the numerical values. (a) A 10-year 100, 5% bond yielding 7.2%. (b) A 10-year 100, 521% bond yielding 7.7%. (c) A 12-year 100, 5% bond yielding 7.2%. (d) A 12-year 100, 512% bond yielding 7.7%.

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Why did you divide r and j by 2 and multiply n by 2? Why is it assumed to be semiannual if not specified?

mikaelasesler