Question: QUESTION ONE A 91 days treasury bill with a par value of K100 has been issued at a price of K97.55. Required: (a) Calculate the

QUESTION ONE A 91 days treasury bill with a par value

QUESTION ONE A 91 days treasury bill with a par value of K100 has been issued at a price of K97.55. Required: (a) Calculate the bond equivalent yield of the Treasury bill. (b) If the Treasury bill above was a 182 instrument, would the bond equivalent yield be more than or less than the bond equivalent yield calculated above? A 273 Treasury bill with a par value of K100.00 has a bond equivalent yield of 12.75%, which would be achieved if by the current Treasury bill holder if it was held until maturity. Required: Calculate the issue price of the Treasury bill [TOTAL: 2 MARKS] A company has in issue a 5% Bond that is currently trading at $97.75 per $100.00 nominal. The bond is redeemable at its par value of $100.00 in five years' time and coupon payments are made annually The company plans to issue another bond with a coupon rate of 4%, but with the same yield to maturity as the current bond. The proposed bond will have a maturity period of five years and its coupon payments will be made annually. The bond will be redeemed at its par value of $100.00 in five years' time. Required: (a) Calculate the foilowing for the current bond: 0 Current yield (1) Simple yield to maturity (lt) Yleld to maturity (gross redemption yield) [6 Marks) (b) Calculate the issue price of the proposed bond issue and calculate its current yield and simple yield to maturity. [4 marks]

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