Question: 4) If the bond is bought on 15 Dec 2018 at the arbitrage-free price and sold on 15 Dec 2019 at $99, what will be realised rate of return on bond. Show calculations. (3 marks) (sale price-arbitrage free price) Realised Rate of Return= *100 arbitrage free price (99-95.9235) Realised Rate of Return= *100 95.9235 Realised Rate of Return=3.2072% 4) If the bond is bought on 15 Dec 2018 at the arbitrage-free price and sold on 15 Dec 2019 at $99, what will be realised rate of return on bond. Show calculations. (3 marks) Realised Rate of Return= sale price- arbitrage free price) *100 arbitrage free price 99-95.9235 Realised Rate of Return= 100 95.9235 Realised Rate of Return=3.2072%
Question: 4) If the bond is bought on 15 Dec 2018 at the arbitrage-free price and sold on 15 Dec 2019 at $99, what will be realised rate of return on bond. Show calculations. (3 marks) (sale price-arbitrage free price) Realised Rate of Return= *100 arbitrage free price (99-95.9235) Realised Rate of Return= *100 95.9235 Realised Rate of Return=3.2072% 4) If the bond is bought on 15 Dec 2018 at the arbitrage-free price and sold on 15 Dec 2019 at $99, what will be realised rate of return on bond. Show calculations. (3 marks) Realised Rate of Return= sale price- arbitrage free price) *100 arbitrage free price 99-95.9235 Realised Rate of Return= 100 95.9235 Realised Rate of Return=3.2072%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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4) If the bond is bought on 15 Dec 2018 at the arbitrage-free price and sold on 15 Dec
2019 at $99, what will be realised rate of return on bond. Show calculations. (3
marks)
(sale price-arbitrage free price)
Realised Rate of Return=
*100
arbitrage free price
(99-95.9235)
Realised Rate of Return=
*100
95.9235
Realised Rate of Return=3.2072%
4) If the bond is bought on 15 Dec 2018 at the arbitrage-free price and sold on 15 Dec 2019 at $99, what will be realised rate of
return on bond. Show calculations. (3 marks) Realised Rate of Return= sale price- arbitrage free price) *100 arbitrage free price
99-95.9235 Realised Rate of Return= 100 95.9235 Realised Rate of Return=3.2072%
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