A bond has a coupon rate of 7.5% paid semiannually, a par value of $1000, a...

A bond has a coupon rate of 7.5% paid semiannually, a par value of $1000, a maturity of 10 years and a yield to maturity of 9%. You are thinking about buying this bond but are unsure about the actual cash outlay required to do so. The last interest payment was December 13, 2018. If you purchase the bond, the transaction will settle on February 25, 2019. There are 75 days between these two dates.

a) Find the clean price of the bond.

b) Find the dirty price of the bond.

c) How much would the cash outlay change if you decided to wait one week before purchasing the bond?

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Expert Solution

jeff jeffy answered 1 year ago

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