Quentin is planning to purchase an Australian Treasury bond with a coupon rate (j₂) of 2.43% and face value of $100. The maturity date of the bond is 15 May 2033. Quentin's bond matures at par.

If Quentin purchased this bond on 5 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 1.43% p.a. compounded half-yearly, allowing for taxation. Quentin needs to pay tax at rate 22.4% on coupon payments. Assume the tax on coupon is paid immediately on the coupon payment date.

Answer

a.

$106.8490

b.

$107.0329

c.

$107.0336

d.

$106.0904