Question

INVESTMENTS PLEASE, GIVE THE SOLUTION WITHOUT USING EXCEL & FINANCIAL CALCULATOR Assume you bought \$1000 of...

INVESTMENTS

PLEASE, GIVE THE SOLUTION WITHOUT USING EXCEL & FINANCIAL CALCULATOR

Assume you bought \$1000 of the bond below on October 7/2015.

 Company As of 6-Oct-2015
 OVERVIEW
 Price: 104.76 Coupon (%): 3.000 Maturity Date: 1-Oct-2017 Yield to Maturity (%): 1.279 Current Yield (%): 2.864 Fitch Ratings: A Coupon Payment Frequency: Semi-Annual First Coupon Date: 1-Apr-2013 Type: Corporate Callable: No

1. When was the last coupon paid before your purchase?

2. What is the convention to count days for this bond?

3. What would be the accrued interest you paid when you bought it?

4. What was the quote price for the amount you paid?

5. What was the total (invoice) price you paid for the full amount you bought of this bond?

1. The last coupon was paid on 01/October/2015, considering it has a semi-annual coupon paying bond.

2. Day count convention for this bond is 30/360 as it is for corporate bonds in US

3. Accrued interest will be for 6 days as it was purchased on 7th October. 3% of \$100 for 6 days ie \$3*6/180= \$0.1 accrued interest per bond. Assuming 10 bonds are purchased, so total accrued interest is \$0.1*10= \$1

4.The quote price is the clean price of the bond. The bond have accrued interest of \$0.1 and the price paid is \$104.76 so the quote price is \$104.76- \$0.1= \$104.66.

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