Question
On February 2, 2016, an investor held some Province of Ontario stripped coupons in a self administered RRSP at Scotia McLeod, an investment dealer. Each
On February 2, 2016, an investor held some Province of Ontario stripped coupons in a self administered RRSP at Scotia McLeod, an investment dealer. Each coupon represented a promise to pay $100 at the maturity date on January 13, 2022, but the investor would receive nothing until then. The value of the coupon showed as $76.04 on the investor's screen. This means that the investor was giving up $76.04 on February 2, 2016, in exchange for $100 to be received just less than six years later.
Based upon the $76.04 price, what rate was the yield on the Province of Ontario bond?
On February 2, 2016, an investor held some Province of Ontario stripped coupons in a self administered RRSP at Scotia McLeod, an investment dealer. Each coupon represented a promise to pay $100 at the maturity date on January 13, 2022, but the investor would receive nothing until then. The value of the coupon showed as $76.04 on the investor's screen. This means that the investor was giving up $76.04 on February 2, 2016, in exchange for $100 to be received just less than six years later.
Based upon the $76.04 price, what rate was the yield on the Province of Ontario bond?
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Financial and Managerial Accounting
Authors: Horngren, Harrison, Oliver
3rd Edition
978-0132497992, 132913771, 132497972, 132497999, 9780132913775, 978-0132497978
