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Calculate the amount to be paid by the buyer of the 10-year bond 20/05/2008-2018, at a...

Calculate the amount to be paid by the buyer of the 10-year bond 20/05/2008-2018, at a fixed interest rate of 8.60%, with a par value of 500,000,000$, with price at 98.5 on

a) 20/06/2012

b) 20/04/2013

c) 20/07/2013.

Solutions

Expert Solution

Assuming annual payments

Price = Quoted price + accrued interest

Assuming annual payments Find the market rate
Rate 8.8320%
a) 20/06/2012 Quoted price $494,770,062.02
Accrued interest 3583333.333
Total Price $498,353,395.35
b) 20/04/2013 Quoted price $494,770,062.02
Accrued interest 39416666.67
Total Price $534,186,728.69
c) 20/07/2013. Quoted price $495,468,177.00
Accrued interest 7166666.667
Total Price $502,634,843.66

Workings

jeff jeffy answered 4 months ago
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