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B2. Today is 15 December 2021. Please calculate today's flat price (Careful! Pay attention! Don't lose marks for answering with the invoice price!) of a
B2. Today is 15 December 2021. Please calculate today's flat price (Careful! Pay attention! Don't lose marks for answering with the invoice price!) of a quarterly coupon-paying bond that is risk-free, pays a 4% coupon, has a face value of $100 and has a bond-equivalent yield to maturity of 6%. Definitions are important: Because this is a quarterly coupon paying bond, assume that the annualised BEY is 4 times the periodic yield. The coupons are paid 31 December, 31 March, 30 June, 30 September (for simplicity, assume that those are the coupon payment dates even if those days are on a weekend). The bond matures March 31, 2023. [8 marks]
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