Question
11. a. You're considering buying a 14 year US Treasury 3% coupon bond with a face value of $1000. The bond pays coupons semi-annually. The
11.
a. You're considering buying a 14 year US Treasury 3% coupon bond with a face value of $1000. The bond pays coupons semi-annually. The next coupon will be paid in 6 months. The bond has a YTM of 8.1% when expressed as an APR (not as an EAR). Determine the current price of the bond. Express you answer in dollars and cents.
b. You're interested in purchasing a 12 year US Treasury 5% coupon bond with a face value of $1000. The bond pays coupons semi-annually. The next coupon will be paid in 6 months. The bond has a YTM of 3.3% when expressed as an effective 6-month rate (not as an EAR, or as an APR). Determine the current price of the bond. Express you answer in dollars and cents.
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Applied Quantitative Finance
Authors: W.; T. Kleinkow; G. Stahl Hardle
1st Edition
3540434607, 978-3540434603
