Question
A) An investment bank creates STRIPS from $10,000,000 U.S. 3.00% coupon rate Treasury bond due in seven years. The banker paid 93.95% of face value
A) An investment bank creates STRIPS from $10,000,000 U.S. 3.00% coupon rate Treasury bond due in seven years. The banker paid 93.95% of face value for it for a yield to maturity of 4.00%. What is the Price (in percent of face value) of the bond due in three years if it can be sold at a price to yield of 3.50%?
B) Same STRIP as before: An investment bank creates STRIPS from $10,000,000 U.S. 3.00% coupon rate Treasury bond due in seven years. The banker paid 93.95% of face value for it for a yield to maturity of 4.00%. What is the Price (in percent of face value) of the bond due in three years if it can be sold at a price to yield of 3.50%?
C) Same STRIP as before: An investment bank creates STRIPS from $10,000,000 U.S. 3.00% coupon rate Treasury bond due in seven years. The banker paid 93.95% of face value for it for a yield to maturity of 4.00%. What is the Price (in percent of face value) of the principal amount (due in seven years) price to yield of 3.90%?
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