Respuesta :
Answer:
When using a financial calculator to compute the issue price of the bonds, the applicable periodic interest rate ("I") is 3.923%
Explanation:
Hi, first, the discount interest rate that you have to choose is 8%, because 9% is the coupon rate (which in our case would be 9%/2=4.5% and this is used only to find the amount to be paid semi-annually).
Now we know we have to choose 8%, but this is an effective rate (I know this is an effective rate because no units were mentioned), and by definition it is a periodic rate, but it is not the rate that we need since the payments are going to be made in a semi-annual way, therefore we need to use the following equation.
[tex]r(semi-annual)=[1+r(annual)]^{\frac{1}{2} } -1[/tex]
So, everything should look like this.
[tex]r(semi-annual)=[1+0.08]^{\frac{1}{2} } -1=0.03923[/tex]
Therefore, the periodic interest that yuo have to use to calculate the price of the bond is 3.923%
Best of luck.
