Suppose the current YTM for the floating rate coupon bond is 4% pa. If the floating coupon bond pays coupon semi-annually, what is the price of this bond if today is the issuance date A. Par value B. $102 C. $98 D. Price can’t be calculated because maturity and coupon rate are not given
Question
Suppose the current YTM for the floating rate coupon bond is 4% pa. If the floating coupon bond pays coupon semi-annually, what is the price of this bond if today is the issuance date A. Par value B. 98 D. Price can’t be calculated because maturity and coupon rate are not given
Solution
D. Price can’t be calculated because maturity and coupon rate are not given
Explanation: The price of a bond is calculated based on the present value of its future cash flows, which include the periodic coupon payments and the par value at maturity. In this case, we don't have information about the maturity date and the coupon rate of the bond, so we can't calculate its price.
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