Question: A fixed interest stock with an optional redemption date at any time between 12 and 19 years from the date of isssue is redeemable at

 A fixed interest stock with an optional redemption date at any

A fixed interest stock with an optional redemption date at any time between 12 and 19 years from the date of isssue is redeemable at 112%. It pays coupons of 7.0% per annum half-yearly in arrears. An investor, subject to 24% income tax and 25% capital gains tax, purchases ex-dividend 5 months after issue a 3,000 nominal of the bond and obtains a net effective yield of 4.2% per half-year. Calculate, to 2 decimal places, the price paid by the investor. A fixed interest stock with an optional redemption date at any time between 12 and 19 years from the date of isssue is redeemable at 112%. It pays coupons of 7.0% per annum half-yearly in arrears. An investor, subject to 24% income tax and 25% capital gains tax, purchases ex-dividend 5 months after issue a 3,000 nominal of the bond and obtains a net effective yield of 4.2% per half-year. Calculate, to 2 decimal places, the price paid by the investor

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