Karl is planning to purchase a Treasury bond paying a (2) coupon rate of 3.86% p.a. The face value of the bond is $100. Its maturity date is 15 March 2033; the bond matures at par. If Karl purchased this bond on 4 March 2020, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 4.24% p.a., compounded half-yearly. Karl needs to pay 19.7% of coupon payments and capital gains in tax. Assume that all tax payments are delayed by a half- year. O a. $89.0716 O b. $87.3203 O c. $79.1253 O d. $98.0081
Karl is planning to purchase a Treasury bond paying a (2) coupon rate of 3.86% p.a. The face value of the bond is $100. Its maturity date is 15 March 2033; the bond matures at par. If Karl purchased this bond on 4 March 2020, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 4.24% p.a., compounded half-yearly. Karl needs to pay 19.7% of coupon payments and capital gains in tax. Assume that all tax payments are delayed by a half- year. O a. $89.0716 O b. $87.3203 O c. $79.1253 O d. $98.0081
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:Karl is planning to purchase a Treasury bond paying a (2)
coupon rate of 3.86% p.a. The face value of the bond is
$100. Its maturity date is 15 March 2033; the bond
matures at par.
If Karl purchased this bond on 4 March 2020, what is his
purchase price (rounded to four decimal places)? Assume
a yield rate of 4.24% p.a., compounded half-yearly. Karl
needs to pay 19.7% of coupon payments and capital gains
in tax. Assume that all tax payments are delayed by a half-
year.
a. $89.0716
b. $87.3203
c. $79.1253
d. $98.0081
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