Question
A U.S. Government T-Note with a 3-year maturity has a coupon rate of 4% and a face value of $1,000. The coupons are paid annually
A U.S. Government T-Note with a 3-year maturity has a coupon rate of 4% and a face value of $1,000.
The coupons are paid annually and the next coupon is due in one year. Using the Treasury spot rates given in the table below, what is the price of the coupon bond?
| Treasury Spot Rates |
| |
| Term | Rate | |
| t=1 | 8.97% | |
| t=2 | 6.04% | |
| t=3 | 3.12% | |
The price of the coupon bond is
$___.
(Round to the nearest cent.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Auditing Derivative Strategies
Authors: Barbara Davison
1st Edition
0894134434, 978-0894134432
