An issuer of a unique coupon paying bond is expected to pay the following coupons over the remaining life of the bond $20 in 3 months, $30 in 9 months, and $40 in 15 months The bond has a face value of $1000, and is currently priced at $950 The risk free rate of interest is 5 per annum compounded c...

An issuer of a unique coupon-paying bond is expected to pay the following coupons over the remaining

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An issuer of a unique coupon-paying bond is expected to pay the following coupons over the remaining life of the bond:

$20 in 3 months,
$30 in 9 months, and
$40 in 15 months

The bond has a face value of $1000, and is currently priced at $950. The risk-free rate of interest is 5% per annum compounded continuous. Because the market considers the bond to be risky, it carries a 6% annual default premium.

What is the forward delivery price of a 10-month maturity forward contract written on the above coupon-paying bond?

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Financial Accounting and Reporting a Global Perspective

ISBN: 978-1408076866

4th edition

Authors: Michel Lebas, Herve Stolowy, Yuan Ding

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Posted Date: Sep 18, 2023 03:27 AM

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An issuer of a unique coupon-paying bond is expected to pay the following coupons over the remaining

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Financial Accounting and Reporting a Global Perspective

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