Loïc is planning to purchase a Treasury bond paying a (2) coupon rate of 5.93% p.a. The face value of the bond is $100. Its maturity date is 15 March 2033; the bond matures at par. If Loïc purchased this bond on 5 March 2020, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 8.5% p.a., compounded half-yearly. Loïc needs to pay 28.3% of coupon payments and capital gains in tax. Assume that all tax payments are delayed by a half-year.
Loïc is planning to purchase a Treasury bond paying a (2) coupon rate of 5.93% p.a. The face value of the bond is $100. Its maturity date is 15 March 2033; the bond matures at par. If Loïc purchased this bond on 5 March 2020, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 8.5% p.a., compounded half-yearly. Loïc needs to pay 28.3% of coupon payments and capital gains in tax. Assume that all tax payments are delayed by a half-year.
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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![Loïc is planning to purchase a Treasury bond paying a (₂)
coupon rate of 5.93% p.a. The face value of the bond is
$100. Its maturity date is 15 March 2033; the bond
matures at par.
If Loïc purchased this bond on 5 March 2020, what is his
purchase price (rounded to four decimal places)? Assume
a yield rate of 8.5% p.a., compounded half-yearly. Loïc
needs to pay 28.3% of coupon payments and capital
gains in tax. Assume that all tax payments are delayed by
a half-year.
O a. $64.0343
O b. $82.7153
O c. $66.4072
O d. $60.3125](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F30c11fcf-8141-4309-b21a-50a6699771f0%2Fdf21dbe0-801d-4f60-80cc-8074fe6b502c%2Fhpgu5qc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Loïc is planning to purchase a Treasury bond paying a (₂)
coupon rate of 5.93% p.a. The face value of the bond is
$100. Its maturity date is 15 March 2033; the bond
matures at par.
If Loïc purchased this bond on 5 March 2020, what is his
purchase price (rounded to four decimal places)? Assume
a yield rate of 8.5% p.a., compounded half-yearly. Loïc
needs to pay 28.3% of coupon payments and capital
gains in tax. Assume that all tax payments are delayed by
a half-year.
O a. $64.0343
O b. $82.7153
O c. $66.4072
O d. $60.3125
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