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Q5) 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
Q5) 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 $80 at the maturity date on January 13, 2023, but the investor would receive nothing until then. The value of the coupon showed as $70 on the investor's screen. This means that the investor was giving up $70 on February 2, 2016, in exchange for $B0 to be received just less than seven years later. Based upon the $70 price, what rate was the yield on the Province of Ontario bond? (10 points)
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