Question
Consider a 2 year Treasury note. The bond pays coupons annually, with coupon rate 10% (the par value of the bond is $1,000). The market
Consider a 2 year Treasury note. The bond pays coupons annually, with coupon rate 10% (the par value of the bond is $1,000). The market interest rate is 5% and will always be 5%.
a. What is the bond price if you buy the bond today? What is the bond price if you buy the bond in six months.
b. What is the bond price if you buy the bond in one year, immediately before the first coupon payment?
c. What is the bond price if you buy the bond in one year, immediately aer the first coupon payment?
d. What is the bond price if you buy the bond in 18 months?
Please show these answers in excel.
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