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Which of the following statements is NOT correct?

Which of the following statements is NOT correct?

FINANCIAL ACCOUNTING
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 20 year Australian government bond was just issued at par with a yield of 3% pa. The fixed coupon payments are semi-annual. The bond has a face value of $1,000. Three years later, just after the sixth coupon is paid, the yield of the bond increases to 3.65% ра. Which of the following statements is NOT correct? а. The value of the bond on the maturity date, just before the last coupon payment, will be $1,015 b. The bond price is expected to rise by 3.65% from just after the sixth coupon, to just before the seventh coupon. C. After the sixth coupon is paid, the number of future coupons (T) will be 14. d. After the sixth coupon is paid, the bond will trade at a discount. е. The value of the bond on the maturity date, just after payment of the last coupon and face value, will be $0
Transcribed Image Text:A 20 year Australian government bond was just issued at par with a yield of 3% pa. The fixed coupon payments are semi-annual. The bond has a face value of $1,000. Three years later, just after the sixth coupon is paid, the yield of the bond increases to 3.65% ра. Which of the following statements is NOT correct? а. The value of the bond on the maturity date, just before the last coupon payment, will be $1,015 b. The bond price is expected to rise by 3.65% from just after the sixth coupon, to just before the seventh coupon. C. After the sixth coupon is paid, the number of future coupons (T) will be 14. d. After the sixth coupon is paid, the bond will trade at a discount. е. The value of the bond on the maturity date, just after payment of the last coupon and face value, will be $0
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