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Calculate the selling price and the dollar profit or loss

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Julie buys a bond with a face value of $100, a time to maturity of three years, a coupon of 3% pa with semi-annual payments and a yield of 3% pa. Eighteen months later (immediately after the third coupon has been paid), the Reserve Bank of Australia unexpectedly cuts the cash rate. The yield on Julie's bond drops to 2.5% pa and she decides to sell.

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Question 1: Calculate the selling price and the dollar profit or loss Julie has made on selling the bond (ignore coupons), outlining why this profit or loss has occurred.

Reference no: EM132493637

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