Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A ten - year US treasury bond pays a single annual coupon of $ 3 0 , 0 0 0 USD and has a face

A ten-year US treasury bond pays a single annual coupon of $30,000 USD and has a face value of $1M USD. If the bond is currently trading for $983,112.41, then which of the following statements can be made:
A) The risk-free rate is 3.2%
B) The proxy/estimate/substitute rate for the risk-free rate is 3%
C) The proxy/estimate/substitute rate for the risk-free rate is 3.2%
D) The US government will never default in any possible outcome in the future.
E) A and D
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Chains Of Finance How Investment Management Is Shaped

Authors: Diane-Laure Arjalies, Philip Grant, Iain Hardie, Donald MacKenzie, Ekaterina Svetlova

1st Edition

0198802943, 978-0198802945

More Books

Students also viewed these Finance questions

Question

e. What difficulties did they encounter?

Answered: 1 week ago