Question
Assuming today is 2/16/21, your firm wants to purchase a $10,000 par value U.S. Treasury bond with 30 years to maturity, annual coupon rate of
Assuming today is 2/16/21, your firm wants to purchase a $10,000 par value U.S. Treasury bond with 30 years to maturity, annual coupon rate of 2.00% with semiannual coupon payments. The market annual yield to maturity on 30-year T bonds, found in the US Treasury Yield curve, is 2.08%. What is the asked price (market price) for the bond? If the YTM on the 30 US Treasury Bond rate jumps immediately to 3.00%, what is the new price for the 30-year T bond in part A, above? How much, in percent, would you lose or gain if you had purchased the bond in part A.
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