Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An investor purchased a 20-year 6.05% Treasury note at the issue price of 109.5 on June 1, 2021. As the government response to COVID-

image text in transcribed

An investor purchased a 20-year 6.05% Treasury note at the issue price of 109.5 on June 1, 2021. As the government response to COVID- 19 pandemic continued, investors became worried about the U.S. government's ability to service its growing debt burden and sold large quantities of Treasury securities. The decreased demand pushed Treasury prices down. On June 1, 2022, exactly one year after buying the T-note, the investor sold it for 86.66 after receiving two-coupon payments. What was the yield to maturity when the investor purchased the note? What was the investor's realized return, stated as an APR, when she sold the note? LO2 O The yield to maturity at purchase is -3.03%, while the rate of return at sale is 21.6%. O The yield to maturity at purchase is 5.28%, while the rate of return at sale is -16.22%. O The yield to maturity at purchase is 3.03%, while the rate of return at sale is -16.03%. O The yield to maturity at purchase is 5.10%, while the rate of return at sale is -12.18%. Note: Clicking any

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Entrepreneurial Finance

Authors: J . chris leach, Ronald w. melicher

4th edition

538478152, 978-0538478151

More Books

Students also viewed these Finance questions