Question
Gerald is planning to purchase an Australian Treasury bond with a coupon rate ( j 2 ) of 1.03% and face value of $100. The
Gerald is planning to purchase an Australian Treasury bond with a coupon rate (j2) of 1.03% and face value of $100. The maturity date of the bond is 15 May 2033. Gerald's bond matures at par. If Gerald purchased this bond on 6 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 1.28% p.a. compounded half-yearly, allowing for taxation. Gerald needs to pay tax at rate 24.4% on coupon payments. Assume the tax on coupon is paid immediately on the coupon payment date. |
Question 1Answer
a.
$93.7444
b.
$93.5375
c.
$93.5380
d.
$93.1483
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