day corporate bond with a coupon rate of 2= 1.25% p.a. and a face value of $100. This corporate bo matures at par. Its maturity date is 1 January, 20 The yield rate is assumed to be /2 15.8% p.a, Assume that this corporate bond has a 8% chan of default in any six-month period during its terr Assume, also, that, if default occurs, Georg will receive no further payments at all. Calculate Georg's purchase price. Round your answer to
day corporate bond with a coupon rate of 2= 1.25% p.a. and a face value of $100. This corporate bo matures at par. Its maturity date is 1 January, 20 The yield rate is assumed to be /2 15.8% p.a, Assume that this corporate bond has a 8% chan of default in any six-month period during its terr Assume, also, that, if default occurs, Georg will receive no further payments at all. Calculate Georg's purchase price. Round your answer to
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 13P
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Question
![Today is 1 July, 2022, Georg plans to purchase a
corporate bond with a coupon rate of 2 1.25%
p.a. and a face value of $100. This corporate bond
matures at par. Its maturity date is 1 January, 2025.
WIThe yield rate is assumed to be 2 15.8% p.a.,
Assume that this corporate bond has a 8% chance
of default in any six-month period during its term.
Assume, also, that, if default occurs, Georg will
receive no further payments at all. Calculate
Georg's purchase price. Round your answer to
three decimal places.
a.
S72.957
b.
S70.676
C.
$47.051
d.
$40.650](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F54e72357-f51a-4346-816f-754b42008ad8%2Ffd17a9f9-778f-4102-8b95-6596f7e650a0%2F8vhi3s_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Today is 1 July, 2022, Georg plans to purchase a
corporate bond with a coupon rate of 2 1.25%
p.a. and a face value of $100. This corporate bond
matures at par. Its maturity date is 1 January, 2025.
WIThe yield rate is assumed to be 2 15.8% p.a.,
Assume that this corporate bond has a 8% chance
of default in any six-month period during its term.
Assume, also, that, if default occurs, Georg will
receive no further payments at all. Calculate
Georg's purchase price. Round your answer to
three decimal places.
a.
S72.957
b.
S70.676
C.
$47.051
d.
$40.650
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