The underwriters of a $10 million dollar bond issue paid $9.5 million for the bonds issued by a...

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The underwriters of a $10 million dollar bond issue paid $9.5 million for the bonds issued by a construction company. The bonds had an interest rate of 15% per year payable semi-annually with a maturity date of 20 years. The underwriters thought the bonds could be sold to the other investors with an investment yield of 15% per year compounded semi-annually. However, they were unpleasantly surprised that the new investors required a yield on their investment of 16% per year compounded semi-annually. How much did the underwriters make or lose on their investment? Please show all procedures.
	
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Robert · Accepted Answer

The underwriters of a $10 million dollar bond issue paid $9.5 million for the bonds issued by a 
construction company. The bonds had an interest rate of 15% per year payable semi-annually with a 
maturity date of 20 years. The underwriters thought the bonds could be sold to the other investors with an 
investment yield of 15% per year compounded semi-annually. However,

The underwriters of a $10 million dollar bond issue paid $9.5 million for the bonds issued by a construction company. The bonds had an interest rate of 15% per year payable semi-annually with a...

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