An investor buys a semi-annual 9.5% coupon paying bond with a par value of R8 000 000. The yield to maturity (YTM) and clean price on 10 March 2021, when the bond is traded, are 10.5% and R87.10253%, respectively. The maturity date of the bond is 15 September 2033. Coupon payments are made on 15 March and 15 September, and the register closes ten days prior to the coupon payments becoming due on 5 March and 5 September. The modified duration of the bond is 4.6 years.

Note: show all calculations and round off your final answers to two decimal places.

3.1 Is the bond trading at par, discount or premium? Give a reason for your answer. (2)

3.2 Calculate the current yield on the bond. (1)

3.3 Is the bond trading cum-interest or ex-interest? Give a reason for your answer. (2)

3.4 Calculate the accrued interest (in rand percentage) on the bond. (1)

3.5 Determine the all-in price (in rand percentage) of the bond. (1)

3.6 Calculate the total consideration that the buyer should pay. (1)

3.7 What is the percentage change in the bond price if the YTM increases by 120 basis points (bps)? (1)

3.8 Interpret the bonds modified duration value of 4.6 years. (1)