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Question 1 ( 1 1 marks ) On 1 April 2 0 2 4 , you've just purchased a 1 0 - year bond issued

Question 1(11 marks)
On 1 April 2024, you've just purchased a 10-year bond issued by MTR Corporation to finance the future railway development. The bond has a face value of $1,000 and carries 8% coupon, paid semi-annually. The yield of the bond is (APR)10%, compounded semi-annually.
(a) How much did you pay to buy the bond on 1 April 2024?
(4 marks)
(b) Is the bond a par bond, discount bond or premium bond? Explain.
(2 marks)
(c) On 31 March 2025, the bond becomes a par bond as its yield has decreased from (APR)10% to (APR)x%, compounded semi-annually.
(i) What is the value of x? Explain.
(2 marks)
(ii) If you sell the bond immediately after receiving the (second) coupon, calculate the capital gain yield.
(3 marks)
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