Biti Bank purchase a $1,500 bond that pays 7% pa compounded half-yearly and is redeemable in...

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Biti Bank purchase a $1,500 bond that pays 7% pa compounded half-yearly and is redeemable in exactly 14 years. The price paid will yield the bank 3% pa compounded half-yearly if held to maturity. Biti Bank hold this bond for 3 years before coming to a decision that the bond should be sold. They decide to sell to ZNZ Bank at 2.6% pa compounded half-yearly. a) Calculate the price (P) that Biti Bank paid to purchase the bond. Give your answer in dollars and cents to the nearest cent. P = $ b)Calculate the price (Pz) that ZNZ Bank paid to purchase the bond. Give your answer in dollars and cents to the nearest cent. Pz = $ c) Calculate the nominal annual yield compounded half-yearly that Biti Bank realised. You may give your answer as a percentage per annum to the nearest percent or use linear interpolation or a financial calculator to give a more accurate result. Yield = % pa Biti Bank purchase a $1,500 bond that pays 7% pa compounded half-yearly and is redeemable in exactly 14 years. The price paid will yield the bank 3% pa compounded half-yearly if held to maturity. Biti Bank hold this bond for 3 years before coming to a decision that the bond should be sold. They decide to sell to ZNZ Bank at 2.6% pa compounded half-yearly. a) Calculate the price (P) that Biti Bank paid to purchase the bond. Give your answer in dollars and cents to the nearest cent. P = $ b)Calculate the price (Pz) that ZNZ Bank paid to purchase the bond. Give your answer in dollars and cents to the nearest cent. Pz = $ c) Calculate the nominal annual yield compounded half-yearly that Biti Bank realised. You may give your answer as a percentage per annum to the nearest percent or use linear interpolation or a financial calculator to give a more accurate result. Yield = % pa

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Lets solve each part of the question step by step a Calculate the price P that Biti Bank paid to purchase the bond Given Face value of the bond FV 150... View the full answer