B2. The Austratian zovernment issues a two-and-a half year maturity $100 face value bond with an annual coupon rate of 3% paid six monthly (i.e. twice a year bond is boughtinitally by Mr Smith at $103 and fourteen months later sold to Mr Carter for $104. Mr Carter keeps the bond until its maturity date. (3) Represent the time line with the cashflow associated with this product from its issue date to its maturity date from the issuer's perspective. On the sam diagram, represent With an horizontal arrow the investment holding period of Mr Carter. The diagram must be very precise, in particular with respect to th and nature and value of the varlous payments) (1.5 marks) (b) Represent the llow-offunds diagram associated with the transaction in the secondary market. (1 mark) (c) List the different incomes that Mr Carter gets from the bond as an investor. Explain how they affect his taxes. (0.5 marks) (d) Draw how Mr Carter's balance sheet is affected at the time he purchases the bond. (I mark) (e) Instesd of buving a sovernment bond Mr Carter enters a buy order for 1,000 CBA shares at-limit price 549.570. A few seconds later an at-market sell oro comes through A5x for a quantity of 2,000 CBA shares. using the table below that was the central limit order book before the above orders were made, explain whether these two orders will be executed, and if n at which price(s). Describe the resulting changes to the top orders in the central limit orders book, if any. (t mark) Figue 10.2 Commso's order depth acreen for CeA rhares Source: Hunt and Terry (2011). B2. The Austratian zovernment issues a two-and-a half year maturity $100 face value bond with an annual coupon rate of 3% paid six monthly (i.e. twice a year bond is boughtinitally by Mr Smith at $103 and fourteen months later sold to Mr Carter for $104. Mr Carter keeps the bond until its maturity date. (3) Represent the time line with the cashflow associated with this product from its issue date to its maturity date from the issuer's perspective. On the sam diagram, represent With an horizontal arrow the investment holding period of Mr Carter. The diagram must be very precise, in particular with respect to th and nature and value of the varlous payments) (1.5 marks) (b) Represent the llow-offunds diagram associated with the transaction in the secondary market. (1 mark) (c) List the different incomes that Mr Carter gets from the bond as an investor. Explain how they affect his taxes. (0.5 marks) (d) Draw how Mr Carter's balance sheet is affected at the time he purchases the bond. (I mark) (e) Instesd of buving a sovernment bond Mr Carter enters a buy order for 1,000 CBA shares at-limit price 549.570. A few seconds later an at-market sell oro comes through A5x for a quantity of 2,000 CBA shares. using the table below that was the central limit order book before the above orders were made, explain whether these two orders will be executed, and if n at which price(s). Describe the resulting changes to the top orders in the central limit orders book, if any. (t mark) Figue 10.2 Commso's order depth acreen for CeA rhares Source: Hunt and Terry (2011)
