Question
Anurag buys a 5 year, $1,000 face value bond with a 3% coupon. The bond's issue date is January 1, 2020 and it pays semi-annual
Anurag buys a 5 year, $1,000 face value bond with a 3% coupon. The bond's
issue date is January 1, 2020 and it pays semi-annual coupons on January
1 and July 1 each year. Anurag pays $902.17.
a) What is the yield rate for the bond?
b) Assuming the yield rate doesn't change, what is the rst coupon date on
which the bond will be worth more than $950.00?
c) Using an ACT/ACT daycount convention, what is the first day on which
the bond's dirty price exceeds $950.00 (again, assuming no change in yield)?
d) What is the dirty price on that day? What is the accrued interest? What
is the clean price?
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