Question: 3. (Bonds) (a) [3 marks]. A Zero Coupon Bond with face value 100 and maturity in 4 years is sold for 85. Find its (gross)

3. (Bonds) (a) [3 marks]. A Zero Coupon Bond with face value 100 and maturity in 4 years is sold for 85. Find its (gross) yield. (b) [3 marks]. The same bond as in (a) pays capital gains tax at 20%. What is its net yield? (c) [3 marks]. Find the price of a bond whose face value is 100, it pays semiannual coupons at a rate of 1.5% p.a., it has maturity in 3 years and produces a yield of 3% pa. effective. The bond is redeemable at par

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