Today is 1 July, 2019. Hélène has a portfolio whichconsists of two different types of financial instruments(henceforth referred to as instrument A and instrumentB). Hélène purchased all instruments on 1 July 2013 tocreate this portfolio, which is composed of 34 units ofinstrument A and 39 units of instrument B.• Instrument A is a zero-coupon bond with a facevalue of $100. This bond matures at par. Its maturitydate is 1 January 2029.• Instrument B is a Treasury bond with a coupon rateof j2 = 4.87% p.a. and a face value of $100. Thisbond matures at par. Its maturity date is 1 January2022.Calculate the current price of instrument B per $100face value. Round your answer to four decimal places.Assume the yield rate is j2 = 2.2% p.a. and Hélène hasjust received her coupon payment.O a. $108.8953O b. $122.7773O c. $107.7104O d. $106.4603

Bond: - Bond is the written promise made by the borrower to pay a fixed amount of money as stated…

Answered: Today is 1 July, 2019. Hélène has a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 9P

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