Question
On 31 March 2020, the AOFM issued 6-year Government fixed-interest bonds with a face value of $20 million, paying half-yearly coupons at 8.00 per cent
On 31 March 2020, the AOFM issued 6-year Government fixed-interest bonds with a face value of $20 million, paying half-yearly coupons at 8.00 per cent per annum. On 15 September 2022, the holder of the bonds sells at a current yield of 8.75 per cent per annum. You are required to calculate the price of the bond. In your answer, identify whether the bond is trading at a discount or a premium, and explain the logic why this is the case. Show all calculations. please find:
n(number of periods)
i (current yield)
c (coupon payment)
k (fraction of elapsed interest period since the last coupon payment)
P (price at which the bonds will be sold)
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