How much in total would sophie have received

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Reference no: EM133433385

Question: Sophie purchased a 3- year Commonwealth Treasury Note (T-note) with face value of $125,000 that pays interest semi-annually at 5.5% p.a (i.e. the coupon rate). Assuming the market interest rate increases to 7.5% p.a at the start of the second year when Sophie needs to withdraw his investment to finance an emergency personal situation.

a. For how much can he sell the T-note in the secondary market at the beginning of the second year?

b. How much in total would Sophie have received from the investment at the beginning of the second year, if he is able to sell the T-note?

Reference no: EM133433385

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