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Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate...

Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate of j2 = 4.57% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2025. The yield rate is assumed to be j2 = 3.90% p.a. Assume that this corporate bond has a 7.5% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive no further payments at all. Calculate the purchase price for 1 unit of this corporate bond. Round your answer to three decimal places.

Select one: a. 103.965 b. 101.339 c. 51.715 d. 54.714

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jeff jeffy answered 2 years ago
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