Question

Today is 1 July 2020. Joan has a portfolio which consists of two different types of...

Today is 1 July 2020. 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 2012 to create this portfolio and this portfolio is composed of 40 units of instrument A and 35 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 = 4.01% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2023.
  • Calculate the current price of instrument B per $100 face value. Round your answer to four decimal places. Assume the yield rate is j2 = 3.92% p.a. and Joan has just received the coupon payment.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Today is 1 July 2020. Joan has a portfolio which consists of two different types of...
Today is 1 July 2020. 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 2012 to create this portfolio and this portfolio is composed of 40 units of instrument A and 35 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....
Today is 1 July 2020. Joan has a portfolio which consists of two different types of...
Today is 1 July 2020. 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 2012 to create this portfolio and this portfolio is composed of 40 units of instrument A and 35 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....
Today is 1 July 2020. Joan has a portfolio which consists of two different types of...
Today is 1 July 2020. 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 2014 to create this portfolio and this portfolio is composed of 35 units of instrument A and 46 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....
Today is 1 July 2020. Joan has a portfolio which consists of two different types of...
Today is 1 July 2020. 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 2014 to create this portfolio and this portfolio is composed of 28 units of instrument A and 34 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....
Today is 1 July 2018. Matt is 30 years old today. Matt has a portfolio which...
Today is 1 July 2018. Matt is 30 years old today. Matt has a portfolio which consists of three Treasury bonds (henceforth referred to as bond A, bond B and bond C). There are 200 units of bond A, 300 units of bond B and 500 units of bond C. Bond C is a Treasury bond which matures on 1 January 2021. One unit of bond C has a coupon rate of j2 = 3.35% p.a. and a face value...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate of j2 = 4.41% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2025. The yield rate is assumed to be j2 = 3.87% p.a. Assume that this corporate bond has a 5.7% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate of j2 = 2.18% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2025. The yield rate is assumed to be j2 = 3.99% p.a. Assume that this corporate bond has a 2.3% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate...
Today is 1 July 2020, William plans to purchase a corporate bond with a coupon rate of j2 = 3.65% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2025. The yield rate is assumed to be j2 = 4.12% p.a. Assume that this corporate bond has a 1.7% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive...
Clarrie has just bought a 14-year Treasury bond paying coupon semi-annually at j2 = 5% p.a....
Clarrie has just bought a 14-year Treasury bond paying coupon semi-annually at j2 = 5% p.a. The bond matures at par. a. Find Clarrie’s purchase price (per $100 face value, rounded to 3 decimal places) of this Treasury bond, allowing for a 30% tax on interest only, to give a yield of j2 = 3.2% p.a. (net). Draw a cash flow diagram that models this scenario to accompany your answer. b. Find Clarrie’s purchase price (per $100 face value, rounded...
An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures...
An investor has two bonds in her portfolio, Bond C and Bond Z. Each bond matures in 4 years, has a face value of $1,000, and has a yield to maturity of 9.0%. Bond C pays a 12.5% annual coupon, while Bond Z is a zero coupon bond. A. Assuming that the yield to maturity of each bond remains at 9.0% over the next 4 years, calculate the price of the bonds at each of the following years to maturity....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT