Giovanni is planning to purchase an Australian Treasury bond with a coupon rate ( j 2 )
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Question:
Giovanni is planning to purchase an Australian Treasury bond with a coupon rate (j2) of 4.48% and face value of $100. The maturity date of the bond is 15 May 2033. Giovanni's bond matures at par.
If Giovanni purchased this bond on 2 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 4.61% p.a. compounded half-yearly, allowing for taxation. Giovanni needs to pay tax at rate 26.6% on coupon payments. Assume the tax on coupon is paid immediately on the coupon payment date.
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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