Question
7. Suppose you observe a 4-year Treasury bond with a 3% coupon (paid annually) and a $1,000 par value. What is the arbitrage-free price of
7. Suppose you observe a 4-year Treasury bond with a 3% coupon (paid annually) and a $1,000 par value. What is the arbitrage-free price of this bond?
8. Suppose that the bond in question #7 has a yield-to-maturity of 5.50%. If you were to exploit this mispricing opportunity, what would your arbitrage profit be?
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The Essential Credit Repair Handbook
Authors: Deborah McNaughton
1st Edition
160163160X, 978-1601631602
