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A $100,000 par value 30 year U.S. Treasury Bond redeemable at par with a coupon rate of 7.25% per year, payable semiannually, is purchased to yield 7.04% per year, compounded semiannually, by Investor A. Five years after the bond was purchased and immediately after the coupon payment was received, it was sold to another investor (Investor B) at a price which yields 6.52% per year compounded semiannually.

a) What was the sale price of the bond to Investor B?

b) What was the yield rate convertible semiannually of Investor A?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92345814

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