Answer:
gain = $26.24 per bond
Explanation:
trading bonds 100M, means $100,000 in bonds
the trader purchased the bonds at a discount, at 100 - 1.5 = 98.5%
the coupon rate is 9%, if the bonds are sold at 8.9%, then they will be sold at a premium.
to try to determine an approximate selling price = 9%/8.9% = 1.01123
profit per bond = sales price - purchase price = ($1,000 x 1.01123) - ($1,000 x 0.985) = $1,011.24 - $985 = $26.24 per bond
total profit = $26.24 x 100 = $2,624
