It is April 2, 2018, and you are considering purchasing an investment-grade corporate bond that has a $1,000 face value

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answerhappygod
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It is April 2, 2018, and you are considering purchasing an investment-grade corporate bond that has a $1,000 face value

Post by answerhappygod »

It is April 2, 2018, and you are considering purchasing an
investment-grade corporate bond that has a $1,000 face value and
matures on June 4, 2022. The bond's stated coupon rate is 4.40
percent, and it pays on a semiannual basis (that is, on June 4 and
December 4). The bond dealer's current ask yield to maturity is
3.40 percent. (Note: Between the last coupon date and today, there
are 118 "30/360" days. Between last coupon date and the next coupon
date, there are 180 "30/360" days.)
Calculate the total amount (invoice price) you would have to pay
for this bond if you purchased the issue to settle today. Do not
round intermediate calculations. Round your answer to two decimal
places. Enter your answer as a positive value. Express your answer
as a percentage of the bond’s par value.
Separate this total invoice amount into (i) the bond's current
"flat" (without accrued interest) price and (ii) the accrued
interest. Do not round intermediate calculations. Round your
answers to two decimal places. Express your answers as a percentage
of the bond’s par value.
(i).
(ii).
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