Today is 1 July 2021, William plans to purchase a corporate bond with a coupon rate of j2 = 3.65% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2024. The yield rate is assumed to be j2 = 4.5% p.a. Assume that this corporate bond has a 9.6% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive no further payments at all. Calculate the purchase price for 1 unit of this corporate bond. Round your answer to three decimal places. a. 99.016 b. 97.191 c. 55.030 d. 60.418

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
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.Today is 1 July 2021, William plans to purchase a corporate bond with a coupon rate of j2 = 3.65% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2024. The yield rate is assumed to be j2 = 4.5% p.a. Assume that this corporate bond has a 9.6% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive no further payments at all. Calculate the purchase price for 1 unit of this corporate bond. Round your answer to three decimal places.

a.

99.016

b.

97.191

c.

55.030

d.

60.418

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