Today is 1 July, 2019. Latha has a portfolio which consists of two different types of financial instruments (h Latha purchased all instruments on 1 July 2013 to create this portfolio, which is composed of 35 units of in • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity • Instrument B is a Treasury bond with a coupon rate of j2 = 4.87% p.a. and a face value of $100. This b Calculate the current price of instrument B per $100 face value. Round your answer to four decimal place received her coupon payment.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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a.
Today is 1 July, 2019. Latha has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B).
Latha purchased all instruments on 1 July 2013 to create this portfolio, which is composed of 35 units of instrument A and 21 units of instrument B.
Question 8Answer
b.
• Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029.
• Instrument B is a Treasury bond with a coupon rate of j2 = 4.87% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022.
Calculate the current price of instrument B per $100 face value. Round your answer to four decimal places. Assume the yield rate is /2 = 3.25% p.a. and Hélène has just
received her coupon payment.
$106.2948
d.
$104.5951
$103.8598
$113.1500
Transcribed Image Text:a. Today is 1 July, 2019. Latha has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Latha purchased all instruments on 1 July 2013 to create this portfolio, which is composed of 35 units of instrument A and 21 units of instrument B. Question 8Answer b. • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. • Instrument B is a Treasury bond with a coupon rate of j2 = 4.87% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022. Calculate the current price of instrument B per $100 face value. Round your answer to four decimal places. Assume the yield rate is /2 = 3.25% p.a. and Hélène has just received her coupon payment. $106.2948 d. $104.5951 $103.8598 $113.1500
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