To Determine the Present Value of a Bond That Pays

question 58

Multiple Choice

To determine the present value of a bond that pays semiannual interest, which of the following adjustments should not be made to compute the price of the bond?

• A)The annualized coupon should be split in half.
• B)The annual discount rate should be divided by 2.
• C)The number of annual periods should be doubled.
• D)The par value should be split in half.
• E)All of these adjustments have to be made.

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