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Today is 1 July 2020. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and
Today is 1 July 2020. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2013 to create this portfolio and this portfolio is composed of 35 units of instrument A and 32 units of instrument B.
- Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030.
- Instrument B is a Treasury bond with a coupon rate of j2 = 3.06% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2023.
(a) Calculate the current price of instrument A per $100 face value. Round your answer to four decimal places. Assume the yield rate is j2 =3.69% p.a.
Select one:
a. 70.6554
b. 54.7003
c. 50.2342
d. 53.7093
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