4.1.9 The National Post O, a Canadian daily newspaper, has listings after each trading day of...

 

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4.1.9 The National Post O, a Canadian daily newspaper, has listings after each trading day of the closing prices and yields of a number of bonds that traded the previous day. In the March 2, 2004 edition, there was the following listing for a Government of Canada bond: Coupon 4.25 Maturity Date Sep 01/09 Bid S 102.76 Yield% 3.69 (a) Verify that this is the correct price for the bond. (b) In this listing, the price per $100 is rounded to the nearest $.01, and the yield rate is rounded to the nearest .01%. The quoted yield rate could be any number from 3.685% to 3.695% (and would be rounded to 3.69%, we can think of 3.695% as 3.6949999%). Find the resulting prices at the two ends of that range of yield rates. MATION 287 (c) The bid price of 102.76 could have been rounded from an actual price between 102.755 and 102.765. Find the yield rates that correspond to those prices. 4.1.9 The National Post O, a Canadian daily newspaper, has listings after each trading day of the closing prices and yields of a number of bonds that traded the previous day. In the March 2, 2004 edition, there was the following listing for a Government of Canada bond: Coupon 4.25 Maturity Date Sep 01/09 Bid S 102.76 Yield% 3.69 (a) Verify that this is the correct price for the bond. (b) In this listing, the price per $100 is rounded to the nearest $.01, and the yield rate is rounded to the nearest .01%. The quoted yield rate could be any number from 3.685% to 3.695% (and would be rounded to 3.69%, we can think of 3.695% as 3.6949999%). Find the resulting prices at the two ends of that range of yield rates. MATION 287 (c) The bid price of 102.76 could have been rounded from an actual price between 102.755 and 102.765. Find the yield rates that correspond to those prices.

Answer rating: 100% (QA)

aThe correct price for the bond is 10276 The price of the bond is determined by its yield The yield ... View the full answer