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.