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A newly issued U.S. Federal T-Note matures in exactly 10 years. The coupon rate is 3.875% per year and coupons are paid semiannually. The bond
A newly issued U.S. Federal T-Note matures in exactly 10 years. The coupon rate is 3.875% per year and coupons are paid semiannually. The bond is priced at 104.61 (per $100 of face value) and yields 3.33%. The economy is slowing and many forecasters predict a recession. You expect that the monetary authorities will relax monetary policy which will cause interest rates to fall You expect the eld on the 10-year bond to all to 1 % The bond na a ace vaue 31 ou want to earn $1M by investing in bonds to profit from the interest rate change, how many bonds do you buy? In order to earn $1M by investing in bonds, you need to buy bonds. (Round up to the nearest whole number.)
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