A fixed income government bond is available which is redeemable at 106% at any coupon payment date between 2 and 7 years

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A Fixed Income Government Bond Is Available Which Is Redeemable At 106 At Any Coupon Payment Date Between 2 And 7 Years 1 (25.83 KiB) Viewed 140 times

A fixed income government bond is available which is redeemable at 106% at any coupon payment date between 2 and 7 years from the date of the last coupon payment. The bond pays coupons of 6.1% per annum half-yearly, in arrears. An investor who is liable to 20% income tax and 35% capital gains tax purchases the bond 1 month after the last coupon payment date. Calculate, to 2 decimal places, the with-dividend price paid by the investor for £85,000 nominal of the bond that gave a minimum net redemption yield of 7.5% per annum. Answer: Check