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Today, June 1, you want to buy a bond with a quoted bid price of 98.64 and a quoted ask price of 98.66. The bond
Today, June 1, you want to buy a bond with a quoted bid price of 98.64 and a quoted ask price of 98.66. The bond pays interest on January 1 and July 1. Which one of the following is true? |
98.66 percent of par the actual cost to purchase this bond. |
98.65 is the bid-ask spread on the bond. (WRONG) |
98.66 percent of par plus 1/6 of the coupon payment is the actual cost to purchase this bond. |
98.64 percent of par plus 5/6 of the coupon payment is the actual cost to purchase this bond. |
98.66 percent of par plus 5/6 of the coupon payment is the actual cost to purchase this bond. |
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