On 1 July 2019, an investor buys a corporate bond issued by Jeanius plc, which is repayable at par on 1 July 2039 and has an annual coupon rate of 3% payable twice yearly in arrears. (a) Assuming that the gross redemption yield on the bond is 6.0% per annum calculate the purchase price per £100 nominal. (b) Jeanius plc experiences financial problems leading to a falling bond price. On 1st of September 2022 the gross redemption yield on the bond is 11% per annum. On the same day, a bank makes an offer to buy the company if bond holders accept an immediate payment of £48 per £100 nominal. Calculate the price of the bond on 1st of September 2022 and explain whether or not the investor should accept this offer.
On 1 July 2019, an investor buys a corporate bond issued by Jeanius plc, which is repayable at par on 1 July 2039 and has an annual coupon rate of 3% payable twice yearly in arrears.
(a) Assuming that the gross redemption yield on the bond is 6.0% per annum calculate the purchase price per £100 nominal.
(b) Jeanius plc experiences financial problems leading to a falling
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