Bill Mitselfik has purchased a bond that was issued by Acme Chemical. This bond has a face value of $1 comma 000 and pays a dividend of 4% per year, compounded semi-annually. Bill bought the bond five years ago at face value and there are six years remaining until the bond matures. Bill wishes to sell it now for a price that will result in Bill earning an annual yield of 6% compounded semi-annually. What price does Bill need to sell the bond for to earn his desired return?

The correct answer is $1,114.64

Explanation:

According to the scenario, the given data are as follows:

Rate (Semiannual) = 6% ÷ 2 = 3%

Time period = 5 years

Time period (semi annual) (Nper) = 5 × 2 = 10

Face value (PV) = $1,000

payment (pmt) = $1,000 × 4%/2 = $20

We can calculate the FV by using financial calculator,

The attachment is attached below.

So, the Price = $1,114.64

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d. all of the above are true.