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INV3702 Assignment 2 2024 Semester 2

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INV3702 Assignment 2 Full Solutions Semester 2 2024 ;100 % TRUSTED workings, Expert Solved, Explanations and Solutions. For assistance call or W.h.a.t.s.a.p.p us on ...(.+.2.5.4.7.7.9.5.4.0.1.3.2)........... Question 1 You observe the following sovereign bonds. Time to maturity Coupon Yield to mat...

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  • September 5, 2024
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INV3702
ASSIGNMENT 2 SEMESTER 2 2024
UNIQUE NO.
DUE DATE: SEPTEMBER 2024

, INV3702

Assignment 2 Semester 2 2024

Unique Number:

Due Date: 2024

Fixed Income Analysis

Question 1

Steps:

1. Identify the known information about Bond C:

 Time to maturity: 2 years
 Coupon rate: 6% (annual coupon payments)
 Yield to maturity (YTM): 2.496%

2. Calculate the theoretical price of Bond C using the formula for bond
pricing:

Bond Price=((1+YTM)1Coupon Payment)+((1+YTM)2Coupon Payment+Face Value)

Where:

 Coupon payment = 6% of the face value (assume face value = 100).
 Face value = 100 (standard assumption unless stated otherwise).
 YTM = 2.496% or 0.02496.

Thus:

 Coupon Payment = 6% of 100 = 6.
 Face value = 100.
 YTM = 0.02496.

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