Iolanda is planning to purchase an Australian Treasury bond with a coupon rate (j2) of 1.03% and face value of $100. The maturity date of the bond is 15 May 2033. If Iolanda purchased this bond on 4 May 2018, what is her purchase price (rounded to four decimal places)? Assume a yield rate of 1.23% p.a. compounded half-yearly. Iolanda needs to pay 20.6% on coupon payment and capital gain as tax payment. Assume that all tax payments are paid immediately. a. 93.1634 b. 93.6567 c. 77.6109 d. 97.7373
Iolanda is planning to purchase an Australian Treasury bond with a coupon rate (j2) of 1.03% and face value of $100. The maturity date of the bond is 15 May 2033. If Iolanda purchased this bond on 4 May 2018, what is her purchase price (rounded to four decimal places)? Assume a yield rate of 1.23% p.a. compounded half-yearly. Iolanda needs to pay 20.6% on coupon payment and capital gain as tax payment. Assume that all tax payments are paid immediately. a. 93.1634 b. 93.6567 c. 77.6109 d. 97.7373
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 9P
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Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Question
Iolanda is planning to purchase an Australian Treasury bond with a coupon rate (j2) of 1.03% and face value of $100. The maturity date of the bond is 15 May 2033. If Iolanda purchased this bond on 4 May 2018, what is her purchase price (rounded to four decimal places)? Assume a yield rate of 1.23% p.a. compounded half-yearly. Iolanda needs to pay 20.6% on coupon payment and capital gain as tax payment. Assume that all tax payments are paid immediately.
a. 93.1634
b. 93.6567
c. 77.6109
d. 97.7373
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