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A municipal bond dealer buys 100M of G.O. bonds from another dealer at an 8.00 basis less 5/8. The dealer reoffers these bonds, taking another 3/8 point. The reoffering dealer's profit per bond is:

Respuesta :

Answer:

The re- offering profit of the dealer will be $3.75 per bond

Explanation:

The dealer purchased the bonds at the price which is calculated to an 8% YTM (Yield to Maturity), along with an additional 5/8th point which is knocked off that price.

The dealer then re- offers those bonds and the bonds are marked up point of 3/8. Therefore, the re- offering profit of the dealer is computed as:

= 3/8th mark up per bond

= $3.75 per bond

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