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A bond was issued on 1 January 2019 with 6% coupon rate (annual coupon payment) and $5,000 face value. The required return rate for the

A bond was issued on 1 January 2019 with 6% coupon rate (annual coupon payment) and $5,000 face value. The required return rate for the bond is at 4%, and it would be matured on 31 December 2026.

  1. a) If you trade on 22 October 2019, what is the amount of the accrued interest? (6 marks)

  2. b) If you buy the bond on 22 Oct 2019, how much do you pay? (6 marks)

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