2. Determine the quoted price, settlement price and accrued interest of a 4.9% May 2024 CGS...

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2. Determine the quoted price, settlement price and accrued interest of a 4.9% May 2024 CGS with a required yield of 6.8% that has a settlement date of Monday 23 March 2020. 3. Determine the quoted price, settlement price and accrued interest if the settlement date is Monday 11 May 2020? The yield remains the same at 6.8%. Why has the quoted price changed? 4. What is the current yield of the bond in Q2? Why is the current yield smaller/larger than the YTM? Why is the current yield larger/smaller than the coupon rate? 5. Two bond trades settle on 15 July 2019. A 6.8% July 2021 CGS with a YTM of 7.1% and a 7% July 2020 CGS with a YTM of 7.4%. You can reinvest your coupons at a semi- annual rate of 2.5%. Assume interest rates do not change in the next two years. a) Determine the dollar value of the three sources of return for the July 2021 bond and its holding period return. The three sources of return are coupons, reinvestment income on coupons and capital gain/loss b) If you have a two year investment horizon, which bond would you prefer to invest in? 2. Determine the quoted price, settlement price and accrued interest of a 4.9% May 2024 CGS with a required yield of 6.8% that has a settlement date of Monday 23 March 2020. 3. Determine the quoted price, settlement price and accrued interest if the settlement date is Monday 11 May 2020? The yield remains the same at 6.8%. Why has the quoted price changed? 4. What is the current yield of the bond in Q2? Why is the current yield smaller/larger than the YTM? Why is the current yield larger/smaller than the coupon rate? 5. Two bond trades settle on 15 July 2019. A 6.8% July 2021 CGS with a YTM of 7.1% and a 7% July 2020 CGS with a YTM of 7.4%. You can reinvest your coupons at a semi- annual rate of 2.5%. Assume interest rates do not change in the next two years. a) Determine the dollar value of the three sources of return for the July 2021 bond and its holding period return. The three sources of return are coupons, reinvestment income on coupons and capital gain/loss b) If you have a two year investment horizon, which bond would you prefer to invest in?

Answer rating: 100% (QA)

2 To determine the quoted price settlement price and accrued interest of a 49 May 2024 CGS with a required yield of 68 that has a settlement date of Monday 23 March 2020 we need to calculate the prese... View the full answer