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%
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 11MC
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Provide Answer with Explanation
![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%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1052f7a0-de9b-40d8-924a-0b38842f319e%2Fd597a52d-3444-4590-b4bd-d1cdfe25271f%2F2nc10eb_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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%
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