Question
In 1 October 2019 Jack Deed bought two $100,000 Australian Government bonds at par, at the date of the last coupon payment. Both bonds pay
In 1 October 2019 Jack Deed bought two $100,000 Australian Government bonds at par, at the date of the last coupon payment. Both bonds pay 8% per annum coupon paid semi-annually. The first bond will mature on 1 April 2023 and the second bond will mature on1 April 2027.
Since then, the yields on both bonds have risen by 2% per annum, compounded semi-annually. If Jack now intends to sell the bonds, calculate the price he will receive from each bond if he sells on 1 April 2020 at the new yield, immediately after receiving the coupon interest payments due that day.
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