Multiple Choice (select best situatable answer) 21) You purchase a Eurobond, at

Question

Multiple Choice (select best situatable answer)

21) You purchase a Eurobond, at a quoted price of 102%. The annual coupon is 6%, and we

are exactly one month after the past coupon date. You buy 100,000 EUR nominal

value of the bond. What is the total cash paid for this bond purchase?

a. € 102,000

b. € 102,500

c. € 100,500

22) From an US investor's perspective, investing in an emerging market bond is risky

because of:

(I) Interest rate risk

(II) Currency risk

(III) Higher correlation risk

a. (I) & (II)

b. (I) , (II), & (III)

c. (II) & (III)

Explanation / Answer

1) Value of the bond = 100000*102% i.e 102500

Interest amount on bond = 100000*6%*1/12 i.e 500

Total amount to be paid in cash = 102500

2) I & II

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