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Assume a $100,000 par value. a) What is the yield to maturity of the August 2005 Treasury bond with a semi annual payment? b) Compare

Assume a $100,000 par value.

a) What is the yield to maturity of the August 2005 Treasury bond with a semi annual payment?

b) Compare the yield to maturity and the current yield. How do you explain this relationship?

Today is Feb 15th, 2008.

Type

Issue

Date

Price (per $100 par value)

Coupon

Rate

Maturity

Date

YTM

Current

Yield

Rating

Bond

Aug 2005

89.63

4.75%

8-15-2015

5.300%

AAA

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