Hi SIr,
1)Perhaps silly question, but i am stuck in the question to find out how they go this spot yield rates:
Yr 1 - 2.20%
Yr -2- 2.51%..so on
2) how they got bond value 5.57 to calculate current bond price?
Thank you
Ask the Tutor ACCA AFM
Conejo Co
And 3) from where they got additional interest of 037% ( except coupon 3.57) and why they need that interest and the amount of 120 in the same calculation( is it non current liability?)
Thank you
6y ago#2I am sorry, but you are going to have to tell me which exam this question is from.
(I have all past exams, but I cannot remember the name of every question in every
exam :-) )
dear sir,
Its Conejo co from dec 17.
Sorry for this
Thanks
6y ago#41. The credit rating is to be BBB. Therefore the spot yield rate in 1 years time is 1.5% plus 70 basis points, and is therefore 1.5 + 0.7 = 2.2%.
Similarly, in 2 years time it will be 1.7 + 0.81 = 2.51%, and so on.
2. The question says that the coupon rate is currently 5.2% but will increase by 37 basis points. 5.2 + 0.37 = 5.57%.
Sign into reply to this topic.