Question

Henry is planning to purchase a Treasury bond with a coupon rate of 4.71% and face value of $100. The maturity date of the bond is 15 May 2033.

(a) If Henry purchased this bond on 3 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 3.12% p.a. compounded half-yearly.

(b) If Henry purchased this bond on 3 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 3.12% p.a. compounded half-yearly. Henry needs to pay 29.2% on coupon payment as tax payment and tax are paid immediately.

(c) If Henry purchased this bond on 3 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 3.12% p.a. compounded half-yearly. Henry needs to pay 29.2% on coupon payment and capital gain as tax payment. Assume that all tax payments are paid immediately.

Select one for C

a. 85.7825

b. 103.0011

c. 121.1105

d. 105.0407

Answer 1