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Gerald is planning to purchase an Australian Treasury bond with a coupon rate (j2) of 1.32% and face value of $100. The maturity date of
Gerald is planning to purchase an Australian Treasury bond with a coupon rate (j2) of 1.32% 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 4 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 2.31% p.a. compounded half-yearly, allowing for taxation. Gerald needs to pay tax at rate 28.4% on coupon payments. Assume the tax on coupon is paid immediately on the coupon payment date. a. $83.1957 b. $82.7226 c. $83.1948 d. $83.6780
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