Hii all Please anyone explain the part(ii) of the qus. attached below. It is written that the term of the stock is 15 years and the investor buy the stock immediately after the coupon payment. But I'm confused, here are two things: •If the stock is issued now, then there should not be any coupon payment before the investor buy it. •If the stock has been issued on some date in past for 15 years term, then on what date the investor is buying it? (it is not mentioned when the investor is buying the stock). So, shouldn't we take 14.5 years in the equation according to the wording of qus.? Please rply asap Thanks
I think it's just a badly worded question.... There are a couple of typos in (i)... The term of 15 years should really be described as "the remaining term", ie the bond was issued a while ago, now an investor buys it just after a coupon payment, and there are 15 years left.
