Long time reader of these forums. I have not wrote level 2 in 10 years so really, really don’t remember bonds that much. I’m writing level 3 again but it’s been some time as well.
Answer in text for price appreciation on page 114 says [101.118 - 100.937/100.937]. Which I thought was correct. In errata it says it should be [101.118 - 100.937/100]. I don’t understand how 100 can be initial value. I just don’t understand.
I’m assuming this has something to do with par value but I don’t understand. Can somebody explain to me from fundamentals. Would 100.937 ever be denominator?
Now I feel bad about asking the next question because you said I know this. Lol.
I understand that we divide by 100 is because it’s par value but I don’t understand the logic. For this we have 101.118 and 100.937 as MV. I think this means 101.118% of par value and 100.937% of par value.
I don’t understand the math of how this relates to dividing by 100 if since we have 50M in face value. In my head, I still think it’s the old answer multiplied by 50M. I can memorize this but I wish this could stay in my head with logic. It’s been a long time since I wrote papers.