Question
Polycorp Treasury a company in the land of Zanadu is holding a parcel of Zanadu Government Bonds with a face value of $1,000,000. The bonds
Polycorp Treasury a company in the land of Zanadu is holding a parcel of Zanadu Government Bonds with a face value of $1,000,000. The bonds were issued five years and nine months ago with a maturity of 10 years. They pay a coupon rate of interest of 5.5% pa, with interest being paid semi-annually. Currently the market yield quoted for Zanadu bonds is 3.12% pa. The convention in Zanadu financial markets is that the market yield and coupon rate are quoted as annual nominal rates. What is the current market value of the bonds?
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