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Sophia agreed to purchase $20m of 5.25% 21st October 2025 Commonwealth Government Bonds at a yield of 4.25% p.a. on 1st August 2021. a) Using
Sophia agreed to purchase $20m of 5.25% 21st October 2025 Commonwealth Government Bonds at a yield of 4.25% p.a. on 1st August 2021. a) Using the RBA formula, what would have Sophia paid for the bonds on the 1st August 20212 (3 marks) b) If Sophia held the bonds until 21st October 2022 what was her holding period yield if the yield was 4.75%p.a. on the day she sold the bond? (Assuming a reinvestment rate of 3.15% p.a.) (6 marks)
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