Giuseppe is planning to purchase an Australian Treasury bond with a coupon rate (j2) of 2.68% and face value of $100. The maturity date of the bond is 15 May 2033. If Giuseppe purchased this bond on 2 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 1.94% p.a. compounded half-yearly, allowing for taxation. Giuseppe needs to pay tax at rate 21.9% on coupon payments. Assume the tax on coupon is paid immediately on the coupon payment date. a. 101.9133 b. 102.9603 c. 102.9591 d. 102.9019
Giuseppe is planning to purchase an Australian Treasury bond with a coupon rate (j2) of 2.68% and face value of $100. The maturity date of the bond is 15 May 2033. If Giuseppe purchased this bond on 2 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 1.94% p.a. compounded half-yearly, allowing for taxation. Giuseppe needs to pay tax at rate 21.9% on coupon payments. Assume the tax on coupon is paid immediately on the coupon payment date. a. 101.9133 b. 102.9603 c. 102.9591 d. 102.9019
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 17P
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Giuseppe is planning to purchase an Australian Treasury bond with a coupon rate (j2) of 2.68% and face value of $100. The maturity date of the bond is 15 May 2033. If Giuseppe purchased this bond on 2 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 1.94% p.a. compounded half-yearly, allowing for
a. 101.9133
b. 102.9603
c. 102.9591
d. 102.9019
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