Purchase price of the bond-fitzwilliam darcy

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Fitzwilliam Darcy buys a bond one month before a coupon is due to be paid. The bond has a face value of $1,000 and an 8% coupon rate. There are 42 semi-annual coupons remaining. The bond is priced at a YTM of 7%. Fitzwilliam keeps the bond for fourteen years and two months. He then sells the bond. The YTM at time of sale has risen to 8.5%. While the bond was in his possession he deposited all coupons received into a bank account earning interest of J2 = 6%.

a. What was the purchase price of the bond?

b. What was the selling price of the bond?

c. How much was in Fitzwilliam's bank account at the time of sale?

d. What was her HPRR expressed on a per annum compounded twice a year basis?

Reference no: EM132709901

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