Question
On January 1, 2001, Joe Higgins, a bond trader, was analyzing a bond to determine an appropriate asking price. Date of issuance: January 1, 1999
On January 1, 2001, Joe Higgins, a bond trader, was analyzing a bond to determine an appropriate asking price.
Date of issuance: January 1, 1999
Face value: CAD 50,000
Term: 10 years
Coupon rate: 10.0%, compounded semi-annually
Interest payments: June 30th and December 31st
ABC recently had a credit rating assessment by DBRS and was given a BBB rating. The bond yield on companies with similar ratings is 12.0%, compounded semi-annually
1.Calculate the value of this bond. Note: You are not buying this bond on the first day of its life.
2. What is the bond quotation?
3.If Joe Higgins expected rates to fall, what two bond trading strategies might he follow?
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Financial Management Principles And Practices
Authors: Sudhindra Bhat
2nd Edition
8174465863, 978-8174465863
