Question
A US treasury bond was issued today with a maturity of 30 years, face amount of $1000, redeemable at par, coupon rate of 2% convertible
A US treasury bond was issued today with a maturity of 30 years, face amount of $1000, redeemable at par, coupon rate of 2% convertible semiannually. The 30-year treasury yield today is at 1.2% convertible semiannually. Using the information above, answer the next four questions:
a. Without calculation, is the bond priced with a premium or a discount and why? Then, calculate the value of premium / discount.
b. Calculate the book value of the bond right after the 9th coupon payment.
c. Calculate the amount of amortization of premium / accumulation of discount in the 15th coupon payment.
d. Calculate the amount of interest in the 24th coupon payment.
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