A 4% S/A coupon bond with 4 coupons remaining has a BEY of 8.00%. You buy the bond a little over a month before you get the firs

Question

2 years ago

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A 4% S/A coupon bond with 4 coupons remaining has a BEY of 8.00%. You buy the bond a little over a month before you get the firs

t coupon. Specifically, the fraction of the 6-month period that has already elapsed is 0.80. Calculate the dirty price of this bond.

Business

1 answer:

ElenaW [278] · Answer 1 · 2023-05-24T20:08:11+03:00

A 4% S/A coupon bond with 4 coupons remaining has a BEY of 8.00%, is mathematically given as

DP=95.696. Option D is correct

<h3>What is the dirty price of this bond?</h3>

Generally, dirty price is simply defined as It's important to note that a "dirty price" is simply a bond pricing quotation that takes into account both the coupon rate and any interest that has already accumulated on the bond.

In conclusion, Dirty price

DP = (Clean price + interest Accrued)

Therefore

DP=0.80*(4%*100/2)+2*(1-(1+4%)^(-3.20))/(4%)+100/(1+4%)^(3.20)

DP=95.696

CQ

A4% S/A coupon bond with 4 coupons remaining has a BEY of 8.00%. You buy the bond a little over a month before you get the first coupon. Specifically, the fraction of the 6-month period that has already elapsed is 0.80.

Calculate the dirty price of this bond.

O 81.370

85.216

93.471

o 95.696