question archive Today is 1 July 2021
Today is 1 July 2021
Subject:BusinessPrice: Bought3
Today is 1 July 2021. Joan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Joan purchased all instruments on 1 July 2015 to create this portfolio and this portfolio is composed of 298 units of instrument A and 475 units of instrument B. Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030. Instrument B is a Treasury bond with a coupon rate of j2 = 3.38% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2024.
(b) Calculate the current price of instrument B per $100 face value (today's value). Round your answer to four decimal places. Assume the yield rate is j2 = 3.69% p.a. and Joan has just received the coupon payment. a. 97.7558 b. 99.1272 c. 100.9561 d. 99.2661
