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5. A 1-year T-note, face value $100, paying a coupon rate of 8% p.a., trading at a yield to maturity of 6% p.a. (semi annual

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5. A 1-year T-note, face value $100, paying a coupon rate of 8% p.a., trading at a yield to maturity of 6% p.a. (semi annual compounding). (a) Explain briefly why relying on this information alone, there is no way one can figure out the price of a one-year zero coupon bond with a face value of $100. (b) In addition to the above information, it is given that a 0.5 year T-note, paying a coupon rate of 4% p.a., is trading at par. What is the price of a one-year zero coupon bond with a face value of $100? (c) Based on your work in part (b): What is the price of a one-year T-note, with a face value of $100, paying a coupon rate of 4% p.a.? Show the necessary computation. (5 pts) 5. A 1-year T-note, face value $100, paying a coupon rate of 8% p.a., trading at a yield to maturity of 6% p.a. (semi annual compounding). (a) Explain briefly why relying on this information alone, there is no way one can figure out the price of a one-year zero coupon bond with a face value of $100. (b) In addition to the above information, it is given that a 0.5 year T-note, paying a coupon rate of 4% p.a., is trading at par. What is the price of a one-year zero coupon bond with a face value of $100? (c) Based on your work in part (b): What is the price of a one-year T-note, with a face value of $100, paying a coupon rate of 4% p.a.? Show the necessary computation. (5 pts)

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