Today is 1 July 2021. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2017 to create this portfolio and this portfolio is composed of 385 units of instrument A and 334 units of instrument B. • Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030. • Instrument B is a Treasury bond with a coupon rate of j2 = 2.99% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2024. (b) Calculate the current price of instrument B per $100 face value (today's value). Round your answer to four decimal places. Assume the yield rate is j₂ = 4.07% p.a. and Joan has just received the coupon payment. a. 96.9788 O b. 98.9523 ○ c. 93.8860 ○ d. 97.4573
Today is 1 July 2021. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2017 to create this portfolio and this portfolio is composed of 385 units of instrument A and 334 units of instrument B. • Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030. • Instrument B is a Treasury bond with a coupon rate of j2 = 2.99% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2024. (b) Calculate the current price of instrument B per $100 face value (today's value). Round your answer to four decimal places. Assume the yield rate is j₂ = 4.07% p.a. and Joan has just received the coupon payment. a. 96.9788 O b. 98.9523 ○ c. 93.8860 ○ d. 97.4573
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 9P
Related questions
Question
![Today is 1 July 2021. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2017 to create this
portfolio and this portfolio is composed of 385 units of instrument A and 334 units of instrument B.
• Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030.
• Instrument B is a Treasury bond with a coupon rate of j2 = 2.99% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2024.
(b) Calculate the current price of instrument B per $100 face value (today's value). Round your answer to four decimal places. Assume the yield rate is j₂ = 4.07% p.a. and Joan has just received the coupon payment.
a. 96.9788
O b. 98.9523
○ c. 93.8860
○ d. 97.4573](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fea35ef02-38e6-43ad-a886-0e385747eade%2Fca798366-ec6f-49d3-bf97-0b9693cea853%2Fg4519vr_processed.png&w=3840&q=75)
Transcribed Image Text:Today is 1 July 2021. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2017 to create this
portfolio and this portfolio is composed of 385 units of instrument A and 334 units of instrument B.
• Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030.
• Instrument B is a Treasury bond with a coupon rate of j2 = 2.99% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2024.
(b) Calculate the current price of instrument B per $100 face value (today's value). Round your answer to four decimal places. Assume the yield rate is j₂ = 4.07% p.a. and Joan has just received the coupon payment.
a. 96.9788
O b. 98.9523
○ c. 93.8860
○ d. 97.4573
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