What is his purchase price

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Question - Giovanni is planning to purchase an Australian Treasury bond with a coupon rate (i2) of 2.33% and face value of $100. The maturity date of the bond is 15 May 2033. Giovanni's bond matures at par.

If Giovanni purchased this bond on 5 May 2018, what is his purchase price (rounded to four decimal places)? Assume a yield rate of 4.04% p.a. compounded half-yearly, allowing for taxation. Giovanni needs to pay tax at rate 30% on coupon payments. Assume the tax on coupon is paid immediately on the coupon payment date.

Reference no: EM133187661

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