Calculate the purchase price for one unit of corporate bond

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Problem 1: Today is 1 July 2021, William plans to purchase a corporate bond with a coupon rate of j2j2 = 4.51% p.a. and face value of 100. This corporate bond matures at par. The maturity date is 1 January 2024. The yield rate is assumed to be = 3.83% p.a. Assume that this corporate bond has a 1.9% chance of default in any six-month period during the term of the bond. Assume also that, if default occurs, William will receive no further payments at all. Calculate the purchase price for 1 unit of this corporate bond. Round your answer to three decimal places.

a. 101.78

b. 101.404

c. 91.404

d. 92.703

Reference no: EM133011519

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