Considering a Federal Government coupon bond with a face value of 100 pesos, a title maturity period of 1092 days, an annual coupon rate of 20%, and a coupon payment every 182 days, perform the following:

a) Assuming that, after 90 days, you decide to buy the Bond considering an annual rate of return on the instrument of 21.5%, what is the purchase price?
b) If the investor in part a decides to sell the bond 200 days after issuance (110 days after its purchase), what is its sale price and its capital gain or loss if the rate of return on the sale is 21%?

Answer rating: 100% (QA)

a To calculate the purchase price of the bond after 90 days we need to determine the present value of the remaining cash flows coupon payments and fac... View the full answer