Question

# Table 14.0 (for questions 14 and 15). Information regarding Bond G, sold for settlement on June...

Table 14.0 (for questions 14 and 15). Information regarding Bond G, sold for settlement on June 16, 2014.

 Annual Coupon 5% Coupon Payment Frequency Semiannual Interest Payment Dates 10 April and 10 October Maturity Date 10 October 2016 Day-count Convention 30/360 Annual Yield-to-Maturity 4%

1. For Bond G listed in Table 14.0 what is the accrued interest per 100 of par value on the settlement date of June 26, 2014 is:
 1.06 0.75 0.92 none of the above.

1. What is the full price, at settlement on June 26, 2014, of Bond G in Table 14.0?
 101.9 103.84 104.11 none of the above.

1. Accrued Interest = Par Value * Interest Rate * Days Accrued / 360

Accrued Interest = 100 * 0.05 * 76 / 360

Accrued Interest = \$1.06

2. Price at October 10 2014 = Coupon * PVAF ( 0.02, 4) + Maturity * PVF (0.02,4)

Price at October 10 2014 = 2.50 * 3.8077 + 100 * 0.9238

Price at October 10 2014 = 101.9039

Price as on June 26 = (Price at October 10 + Interest) / (1 + 0.04*104/360)

Price as on June 26 = (101.90 + 5) / (1 + 0.04*104/360)

Price as on June 26 = \$103.84

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