A government bond pays coupons at an annual rate of 6%. It has a nominal value of K100 and it will be redeemed at this nominal value in five years' time. Coupon payments are made every year on 31 December and the bond settles on a T+1 basis. The government bond has a clean price of K97.28 on 30 September 2018. An investor wishes to buy this bond on 30 September 2018. Required: Calculate the dirty price of the government bond on 30 September 2018, which is the price at which the bond will be bought by the potential buyer.

A government bond pays coupons at an annual rate of 6%. It has a nominal value of K100 and it will be redeemed at this nominal value in five years' time. Coupon payments are made every year on 31 December and the bond settles on a T+1 basis. The government bond has a clean price of K97.28 on 30 September 2018. An investor wishes to buy this bond on 30 September 2018. Required: Calculate the dirty price of the government bond on 30 September 2018, which is the price at which the bond will be bought by the potential buyer.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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