On 31 March 2020, the AOFM issued 6-year Government fixed-interest bonds with a face value...
80.2K
Verified Solution
Link Copied!
Question
Accounting
On 31 March 2020, the AOFM issued 6-year Government fixed-interest bonds with a face value of $20 million, paying half-yearly coupons at 8.00 per cent per annum. On 15 September 2022, the holder of the bonds sells at a current yield of 8.75 per cent per annum. You are required to calculate the price of the bond. In your answer, identify whether the bond is trading at a discount or a premium, and explain the logic why this is the case. Show all calculations. please find:
n(number of periods)
i (current yield)
c (coupon payment)
k (fraction of elapsed interest period since the last coupon payment)
P (price at which the bonds will be sold)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
