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Please include as much steps A federal treasury bill issued bonds with the following characteristics: Face value = $100,000 and coupon rate is 0.35% per
Please include as much steps
A federal treasury bill issued bonds with the following characteristics: Face value = $100,000 and coupon rate is 0.35% per quarter and payments are quarterly. This bond is bought in the bond market before maturation and there are only 22 payments remaining. The next payment is due after three months which you collect if you buy this bond now. How much would you be willing to pay for this bond today if the next interest payment is due today? As investor, you wish to earn 2% compounded daily. Hint: [1] you need to find quarterly effective interest rate for this investor. [2] Coupon rate can be used to calculate recurrent revenues from this bond which will be coupon rate x face valueStep by Step Solution
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