1. If money is worth 8% compounded semiannually, how much is a bond maturing in nine years, with a face value of £10 000 and a coupon rate of 9%, worth today?
2. A bond with a face value of S5000 pays quarterly interest of 1.5% each period. Twenty-six interest payments remain before the bond matures. How much would you be willing to pay for this bond today if the next interest payment is due now and you want to earn 8% compounded quarterly on your money?
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