Question
An institutional investor, Gilbert Limited, is planning to purchase a straight Eurobond in order to include it in the investment portfolio. Gilbert receives following information:
An institutional investor, Gilbert Limited, is planning to purchase a straight Eurobond in order to include it in the investment portfolio. Gilbert receives following information:
Current Eurobonds in the Euromarkets are trading at a yield of 8% per annum.
An existing Eurobond with a face value of USD 100000 pays 10% per annum half yearly coupons.
The bond Mason is considering will mature on 31 December 2024.
i. If Gilbert purchases the bond on 20 May 2019 and the last coupon on the bond was paid on 31 December 2018, what should be the price that Gilbert should pay for this bond?
ii. Why is the price at 20 May 2019 different from the price Gilbert should have been paid if it purchased the bond at 01 January 2019?
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Modern Analytical Auditing Practical Guidance For Auditors And Accountants
Authors: Thomas Mckee
1st Edition
0899303544, 978-0899303543
