Today is 1 July 2021, William plans to purchase a corporate bond with a coupon rate of j₂ = 4.29% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2024. The yield rate is assumed to be j₂ = 3.75% p.a. Assume that this corporate bond has a 5.7% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive no further payments at all. Calculate the purchase price for 1 unit of this corporate bond. Round your answer to three decimal places. a. 100.699 b. 101.788 c. 76.512 d. 72.808

Today is 1 July 2021, William plans to purchase a corporate bond with a coupon rate of j₂ = 4.29% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2024. The yield rate is assumed to be j₂ = 3.75% p.a. Assume that this corporate bond has a 5.7% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive no further payments at all. Calculate the purchase price for 1 unit of this corporate bond. Round your answer to three decimal places. a. 100.699 b. 101.788 c. 76.512 d. 72.808

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 13P

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