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1 . Today, you can buy a 1 5 - year Treasury bond with a 3 . 5 % coupon rate for $ 1 0

 

1.Today, you can buy a 15-year Treasury bond with a 3.5% coupon rate for $1047.55. Show your work.

A) Calculate the Yield-to-Maturity for this bond

B) Assume the bond is callable 4 years from now for $1017.50. Based on this, calculate the Yield-to-Call for this bond

C) Assume that YOUR required return for this bond is 3.5% (and ignore the call provision).

Based on this, what is the most YOU would be willing to pay? 

Given that, would you be interested in buying this bond at the current price of $1047.55?

 
 

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