A twenty-year Treasury bond with a 4.000% coupon rate is sold at par value in the primary market (assume par value is $100). George purchases the Treasury bond at a price of 97.009% when it has seven years left to maturity and it has a 4.503% yield-to-maturity. George holds the Treasury bond for two years and then sells it to Bill in the secondary market. Bill then holds the Treasury bond to maturity. Assume two years from when George purchases the Treasury bond, yield-to-maturities (interest rates) are:

2.840% on T-bonds with 6-months to maturity

3.100% on T-bonds with 1-year to maturity

3.250% on T-bonds with 2-years to maturity

3.400% on T-bonds with 3-years to maturity

3.660% on T-bonds with 4-years to maturity

3.800% on T-bonds with 5-years to maturity

4.270% on T-bonds with 10-years to maturity

Complete the time line for the original twenty-year Treasury bond. The time line must show only numbers (i.e., no words) unless a variable is unknown in which case you can show it as a question mark (?).

0 1 2

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