An investor just purchased a bond with a stated coupon rate of 6.5% paid semiannually. Since the bond was purchased between coupon dates, the investor had to pay the seller the amount of accrued interest also. Holding everything else constant, if the investor paid the amount of reported accrued interest to the seller, the paid amount would be:

A. correct.

B. slightly higher because the accrued interest does not account for the time value of money.

C. slightly lower because the reported accrued interest amounts are conservative measures.

A 7% annual coupon bond is trading at a price of 105.67 and has three years to maturity. A 5.5% annual payment, 3-year T-note is trading at a price of 107.89. A5-year 7% annual coupon T-note is trading at a price of 109.77. Given the above information, the G-spread will be closest to:

A. 0.16%.

B. 1.32%

.C. 2.19%.