Question
Henry is planning to purchase a Treasury bond with a coupon rate of 1.81% and face value of $100. The maturity date of the bond
Henry is planning to purchase a Treasury bond with a coupon rate of 1.81% and face value of $100. The maturity date of the bond is 15 May 2033.
(a) If Henry purchased this bond on 6 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 2.79% p.a. compounded half-yearly.
(b) If Henry purchased this bond on 6 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 2.79% p.a. compounded half-yearly. Henry needs to pay 21.9% on coupon payment as tax payment and tax are paid immediately.
(c) If Henry purchased this bond on 6 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 2.79% p.a. compounded half-yearly. Henry needs to pay 21.9% on coupon payment and capital gain as tax payment. Assume that all tax payments are paid immediately.
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