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A 10 year Australian government bond was just issued at par with a yield of 4% pa. The fixed coupon payments are semi-annual. The bond
A 10 year Australian government bond was just issued at par with a yield of 4% pa. The fixed coupon payments are semi-annual. The bond has a face value of $1,000. Two years later, just after the fourth coupon is paid, the yield of the bond decreases to 3.65% pa. Which of the following statements is NOT correct? a. After the fourth coupon is paid, the bond will trade at a premium O b. The value of the bond on the maturity date, just after payment of the last coupon and face value, will be $0 O c. The value of the bond on the maturity date, just before the last coupon payment will be $1,020 O d. After the fourth coupon is paid, the number of future coupons (T) will be 16. The bond price is expected to rise by 4% from just after the fourth coupon, to just before the fifth coupon. e
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