The answer for the number of bond to be purchase for the 5% coupon is 1,567,398 but I only be able to get 1,567,071. Also if the would choose the 6% coupon, the company would need to pay an additional of $1,500,000 more each year compare to the 5% coupon but I only being able to get $1,164,645. Not too sure where did I make a mistake in calculating.
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December 2011 Q3B
10y ago#1Without seeing you workings it is impossible for me to be sure as to why you got a different answer.
However, because it effectively involves calculating the IRR, different 'guesses' will give slightly different answers (but will still get full marks in the exam).
Because you are answers are pretty close, I am guessing that this is the reason. Provided that you workings were clear for the market then you would still get full marks.
(But it does illustrate the importance of showing your workings neatly - it is the workings that get the marks (assuming they are neat enough for the marker to follow :-) ) and not the final answer.)
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