You are looking to invest some of your savings in a secure financial instrument and are considering 
purchasing a Canada Savings Bond that has a face value of $2,000 and will mature in 6 years. If you 
want to achieve a rate of return of 4.75% compounded semi-annually, what is the maximum price you 
should be willing to pay for the bond today?

To determine the maximum price you should be willing to pay for the bond today, we can use the formula for the **present value** of a bond or an investment:

\[
PV = \frac{FV}{(1 + \frac{r}{n})^{nt}}
\]

Where:
- $ PV $ is the present value (maximum price you should pay today)
- $ FV $ is the future value (the bond's face value), which is $2,000
- $ r $ is the annual interest rate (rate of return), which is 4.75% or 0.0475
- $ n $ is the number of compounding periods per year (since it is compounded semi-annually, $ n = 2 $)
- $ t $ is the time in years, which is 6 years

Now let's compute the maximum price.

\[
PV = \frac{2000}{(1 + \frac{0.0475}{2})^{2 \times 6}}
\]

Let me calculate that for you.The maximum price you should be willing to pay for the Canada Savings Bond today is approximately **$1,509.05** to achieve a 4.75% return compounded semi-annually over 6 years.

Would you like any further details or clarifications?

Here are five related questions:
1. What happens to the bond's price if the interest rate increases?
2. How would the price change if the bond compounds annually instead of semi-annually?
3. How is the present value affected by extending the bond's maturity to 10 years?
4. What is the future value if the bond compounds quarterly instead?
5. How do Canada Savings Bonds compare with other government bonds in terms of return?

**Tip:** Understanding how compound interest affects investments can help you make informed financial decisions when comparing different savings instruments.

You are looking to invest some of your savings in a secure financial instrument and are considering purchasing a Canada Savings Bond that has a face value of $2,000 and will mature in 6 years. If you want to achieve a rate of return of 4.75% compounded semi-annually, what is the maximum price you should be willing to pay for the bond today?

Learn how to calculate the present value of a $2,000 Canada Savings Bond maturing in 6 years with a 4.75% return compounded semi-annually. This detailed guide explains the compound interest formula and how to use it to determine the maximum price you should pay today. Suitable for high school and college-level students.

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