Question

Refer to the following information:

Amount issued	$380 million
Offered	Issued at a price of 101.00% plus accrued interest (proceeds to company 98.717%) through Citi and JPMorgan.
Interest	8.75% per annum payable June 15 and December 15.
Maturity	June 15, 2041
Denomination, face value, or principal	$1,000

a. The ATAM bond was issued on June 1, 2011, at 101.00%. How much would you have to pay to buy one bond delivered on June 15? Don’t forget to include accrued interest. Assume a 365-day year. (Do not round intermediate calculations. Enter your answer as a percent of par rounded to 3 decimal places.)

b-1. When is the first interest payment on the bond?

b-2. What is the total dollar amount of the payment? (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

c-1. On what date do the bonds finally mature?

c-2. What is the amount to be paid on each bond at maturity? (Do not round intermediate calculations. Enter your answer to 2 decimal places.)

Answer 1

Question 1	Amount	Explanation
Base Bond Price(a)	1,010	Denomination * Offer Price
Accrued Interest(b)	3.60	Interest for 15 days (365 days) @8.75% 8.75%*15/365*1000
Total Price (a+b)	1,014	Paid on 15th

B1

1st Interest Payment is on 30th Jun'19

Question B2	Amount (Mn)	Explanation
Issued Amount	380	Denomination * Offer Price
Accrued Interest(b)	2.733	Interest for 30 days (365 days) @8.75% on Issued Amount

C-1

Bond matures on 15th Jun 2041

C-2

If Interest is paid on regular intervals, then the amount paid at maturity is the face value/ denomination which is $1000/ Bond