Giovanni is planning to purchase an Australian Treasury bond with a coupon rate (₂) of 4.76% and face value of $100. The maturity date of the bond is 15 May 2033. Giovanni's bond matures at par. If Giovanni purchased this bond on 5 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 1.64% p.a. compounded half- yearly, allowing for taxation. Giovanni needs to pay tax at rate 23.1% on coupon payments. Assume the tax on coupon is paid immediately on the coupon payment date. O a. $128.5431 O b. $128.5422 O c. $126.7128 O d. $127.7518
Giovanni is planning to purchase an Australian Treasury bond with a coupon rate (₂) of 4.76% and face value of $100. The maturity date of the bond is 15 May 2033. Giovanni's bond matures at par. If Giovanni purchased this bond on 5 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 1.64% p.a. compounded half- yearly, allowing for taxation. Giovanni needs to pay tax at rate 23.1% on coupon payments. Assume the tax on coupon is paid immediately on the coupon payment date. O a. $128.5431 O b. $128.5422 O c. $126.7128 O d. $127.7518
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Giovanni is planning to purchase an Australian Treasury
bond with a coupon rate (₂) of 4.76% and face value of
$100. The maturity date of the bond is 15 May 2033.
Giovanni's bond matures at par.
If Giovanni purchased this bond on 5 May 2018, what is
his purchase price (rounded to four decimal places)?
Assume a yield rate of 1.64% p.a. compounded half-
yearly, allowing for taxation. Giovanni needs to pay tax at
rate 23.1% on coupon payments. Assume the tax on
coupon is paid immediately on the coupon payment date.
O a. $128.5431
O b. $128.5422
O c. $126.7128
O d. $127.7518
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