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Discussion in 'Financial Planning' started by Ash21, 16th Dec, 2009.

  1. Ash21

    Ash21 Member

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    S.O.S need serious help with Question 3 Investment planning!
    Have the right formula just not sure about answer. can someone please help me??????
     
  2. CJ. Wentworth

    CJ. Wentworth Well-Known Member

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    Sure, happy to help. What's the problem though?
     
  3. Ash21

    Ash21 Member

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    thank you. i've used the formula - Price=FV+C/1+(I*(DM/D)
    and have come up with $99.41 which i don't think is right.


    Price=100+ 4.48%/1+(7.50*250/365)

    Above is what i did and do not think it's correct. Could you please help me?
     
  4. CJ. Wentworth

    CJ. Wentworth Well-Known Member

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    ummm. I'll need a little more info lol.

    I'm assuming the Market Rate is 7.5% and the Coupon Rate is 4.48%?

    Have you taken the coupon rate they've given you and multiplied it by 250/365, resulting in 4.48%? If so, don't :p
     
  5. Ash21

    Ash21 Member

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    The questions is:

    Jenny owns a RBA Bond parcel. She ask you to explain how it is possible that an investor can make or loss money on fixed interest investments.

    As part of your explanation, calculate the puchase price of a 10 year Government bond parcel with the yield rate of 8.95% p.a paid as a half yearly coupon. Assume that the prevailiing market interest rate is 7.50% p.a and that the bond parcel has 250days until maturity. Use a parcel proce of $100


    Could you please help me?????
     
  6. CJ. Wentworth

    CJ. Wentworth Well-Known Member

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    It looks as though you have halved the coupon rate. Don't.

    As Jenny owns the bonds for two 6-month cycles she is entitled to the full payment.
     
  7. Ash21

    Ash21 Member

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    Location:
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    so leave the coupon at 8.95%? and then i should be good to go???