Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$5,571.61
an4_bolt$4,066.43
Visitor$800.00
Visitor$630.00
Visitor$490.00
tomtomtom$453.98
Visitor$410.00
Visitor$360.00
Visitor$340.00
Visitor$281.54
Jayt$280.00
Visitor$260.00
Visitor$250.00
Visitor$230.00
Visitor$230.00
Visitor$230.00
Visitor$220.00
Visitor$210.00
Visitor$210.00
Visitor$190.00
 

Question 764  bond pricing, no explanation

A 4.5% fixed coupon Australian Government bond was issued at par in mid-April 2009. Coupons are paid semi-annually in arrears in mid-April and mid-October each year. The face value is $1,000. The bond will mature in mid-April 2020, so the bond had an original tenor of 11 years.

Today is mid-September 2015 and similar bonds now yield 1.9% pa.

What is the bond's new price? Note: there are 10 semi-annual coupon payments remaining from now (mid-September 2015) until maturity (mid-April 2020); both yields are given as APR's compounding semi-annually; assume that the yield curve was flat before the change in yields, and remained flat afterwards as well.




Copyright © 2014 Keith Woodward