Question

In: Finance

You purchase a $15,000 9.500% Treasury bond maturing November 7, 2019. The bond is priced to...

You purchase a $15,000 9.500% Treasury bond maturing November 7, 2019. The bond is priced to yield 8.750% and settles June 14, 2017.

The base price of the bond is  

Accrued Interest adds  

The invoice price is thus

Solutions

Expert Solution

Face Value= $15,000

Annual Rate= 9.5%

Yield= 8.75%

Settlement Date= 14/06/2017

Maturity Date= 07/11/2019

Base Price of the bond= Value of bond as % of par/ 100*Face value

Value of bond as % of par= using PRICE function in excel we calculate this figure which is 98.36

Now putting the values in above formula we get,

Base price of bond= 98.36/100*15000

= $14,754.16

Answer: Base price of bond is $14,754.16

jeff jeffy answered 1 year ago
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