audia4
April 8th 2006, 04:37 PM
Hello. I was working through Cherry's manual, and I came a cross the following question whose answer puzzled me.
question:
Becky buys an n year 1000 par value bond with 6.5% annual coupons at a price of 825.44. The price assumes an annual effective yield rate of i. the total write up in book value of the bond during the first two years after purchase is 23.76. Calculate i.
1. The answer in the solutions states that the total write up is the excess in the book value of the purchase price. Could someone explain what this means?
question:
Becky buys an n year 1000 par value bond with 6.5% annual coupons at a price of 825.44. The price assumes an annual effective yield rate of i. the total write up in book value of the bond during the first two years after purchase is 23.76. Calculate i.
1. The answer in the solutions states that the total write up is the excess in the book value of the purchase price. Could someone explain what this means?