Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. on 31 march 2020, the aofm issued 6-year governmen

On 31 March 2020, the AOFM issued 6-year Government fixed-interest bonds with a face value...

80.2K

Verified Solution

Question

Accounting

On 31 March 2020, the AOFM issued 6-year Government fixed-interest bonds with a face value of $20 million, paying half-yearly coupons at 8.00 per cent per annum. On 15 September 2022, the holder of the bonds sells at a current yield of 8.75 per cent per annum. You are required to calculate the price of the bond. In your answer, identify whether the bond is trading at a discount or a premium, and explain the logic why this is the case. Show all calculations. please find:

n(number of periods)

i (current yield)

c (coupon payment)

k (fraction of elapsed interest period since the last coupon payment)

P (price at which the bonds will be sold)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Algebra
1.2K views

You roll two six-sided dice. Match each event with its probability.The sum is 8 or...

Accounting
1.2K views

Spartak Moscow Sdn Bhd owns a bond that pays RM400 in annual interest with a RM2000...

Biology
1.2K views

Visceral sensory neuron Integration center Receptor in viscera Response Motor neuron Visceral effector 1000 Stimulus...

Physics
1.2K views

e y 0 n d 9 In the Wheatstone s bridge shown in figure X...

Basic Math
1.2K views

101 11 wy 121 331 34 35 m 34 m 371 2 33 2 15...

Algebra
1.2K views

11 11 y x 3 x 3 4 3 2 1

Accounting
1.2K views

Assume that gross profit averages 35% for BITCO. If net sales are $1,500,000, beginning inventory...

Accounting
1.2K views

What is the minimal amount of line required to connect all of the following nodes?...

Accounting
1.2K views

The management of MD Manufacturing prepared the following estimated balance sheet for March 2015: ...

Accounting
1.2K views

Exerclse 8-15A (Algo) Revislon of estimated useful life LO 8-7 On January 1, Year 1,...

Accounting
1.2K views

Question 2 Millet Sales Corp., a public company, is planning to acquire new computers with...

Accounting
1.2K views

Process costing system Eminence Corporation makes rocking chairs. The chairs move through two departments during...