5. (88) Today is the trade date. The trade date is Monday, October 10, 1994. The following table summarizes the relevant information for three securities: Issuer Coupon Yield Maturity US Treasury Philadelphia (Muni) FNMA (agency) 10% 9% 10% Tuesday, 1/31/95 Monday, 10/2/95 Friday, 7/28/95 Quoted Yield 8.00% 7.00% 8.50% For all three bonds, the face value is $100, and the coupons are paid semi-annually. Note carefully that the last column in the above table reports the quoted yield; this reflects all the standard conventions for a particular type of bond given its maturity. In counting days, there are no leap years; you should also ignore holidays. Also keep in mind that a "business day" (for purposes of counting days till settlement) excludes Saturday and Sunday. Remember to quote prices to the nearest 32nd. It is very important for this question that you show your work! Do not try to use a calculator to compute the price. To receive any credit for this question, you must include all steps in the calculation! Part n. Calculate the quoted price for the bond issued by the US Treasury. Assume the usual settlement for this quoted yield. Part b. Calculate the quoted price for the muni bond issued by the City of Philadelphia. Assume the standard settlement for this quoted yield is three business days. Part c. Calculate the quoted price for the agency bond issued by FNMA. Assume the usual settlement for this quoted yield. 5. (88) Today is the trade date. The trade date is Monday, October 10, 1994. The following table summarizes the relevant information for three securities: Issuer Coupon Yield Maturity US Treasury Philadelphia (Muni) FNMA (agency) 10% 9% 10% Tuesday, 1/31/95 Monday, 10/2/95 Friday, 7/28/95 Quoted Yield 8.00% 7.00% 8.50% For all three bonds, the face value is $100, and the coupons are paid semi-annually. Note carefully that the last column in the above table reports the quoted yield; this reflects all the standard conventions for a particular type of bond given its maturity. In counting days, there are no leap years; you should also ignore holidays. Also keep in mind that a "business day" (for purposes of counting days till settlement) excludes Saturday and Sunday. Remember to quote prices to the nearest 32nd. It is very important for this question that you show your work! Do not try to use a calculator to compute the price. To receive any credit for this question, you must include all steps in the calculation! Part n. Calculate the quoted price for the bond issued by the US Treasury. Assume the usual settlement for this quoted yield. Part b. Calculate the quoted price for the muni bond issued by the City of Philadelphia. Assume the standard settlement for this quoted yield is three business days. Part c. Calculate the quoted price for the agency bond issued by FNMA. Assume the usual settlement for this quoted yield
