Calculate the current price of instrument

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Question - Today is 1 July 2020. Susan has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Susan purchased all instruments on 1 July 2011 to make a portfolio and this portfolio is composed of 21 units of instrument A and 35 units of instrument B.

-Instrument A is a zero-coupon bond with a face value of 100. This bond matures at par. The maturity date is 1 January 2030.

 -Instrument B is a Treasury bond with a coupon rate of j2 = 4.82% p.a. and face value of 100. This bond matures at par. The maturity date is 1 January 2023.

Calculate the current price of instrument B per $100 face value. Round your answer to four decimal places. Assume the yield rate is j2 = 4.48% p.a. and Susan has just received her coupon payment.

a. 100.9446

b. 103.2057

c. 103.0297

d. 100.7957

Reference no: EM132967212

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