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Peter buys a bond with a face value of $100, a time to maturity of three years, a coupon of 3%pa with semi-annual payments and
Peter buys a bond with a face value of $100, a time to maturity of three years, a coupon of 3%pa with semi-annual payments and a yield of 2%pa. Eighteen months later ( just before the coupon is paid), the reserve bank of Australia unexpectedly Increases the cash rate. The yield on peter's bond increases to 2.5%pa. Peter sells the bond. Calculate the buying and selling price of the bond.
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