Today is 1 July, 2019. Camilla has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Camilla purchased all instruments on 1 July 2011 to create this portfolio, which is composed of 22 units of instrument A and 22 units of instrument B. • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. • Instrument B is a Treasury bond with a coupon rate of j2=3.46% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022.

Today is 1 July, 2019. Camilla has a portfolio which consists of two different types of financial instruments (henceforth referred to as instrument A and instrument B). Camilla purchased all instruments on 1 July 2011 to create this portfolio, which is composed of 22 units of instrument A and 22 units of instrument B. • Instrument A is a zero-coupon bond with a face value of $100. This bond matures at par. Its maturity date is 1 January 2029. • Instrument B is a Treasury bond with a coupon rate of j2=3.46% p.a. and a face value of $100. This bond matures at par. Its maturity date is 1 January 2022.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 9P

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