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A U.S. Government 2-year T-Note has a face value of $100 and pays annual coupons of $7. The first coupon is due in one year.
A U.S. Government 2-year T-Note has a face value of $100 and pays annual coupons of $7. The first coupon is due in one year. What is the correct price for the coupon bond today? Use the term structure of interest rates shown in the table.
Term 1 year Spot Rate 6.5%
Term 2-years Spot rate 7.595%
Option: A. 96, B. 97, C. 98 & D. 99
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