Daniel Pascoe just purchased a risk-free US Treasury note having 3 years to maturity and an

annual coupon rate of 6.5 percent. Assume that the coupon/interest payments for Treasury

notes are made once per year (coupon payments occur annually). The annualized yield to

maturity for a risk-free zero coupon bond that matures in one year is 1.75 percent. The

annualized forward interest rate for a 1-year period that begins in 1 year is 2.50 percent,

while the forward rate of interest for a 1-year period that begins in 2 years is 3.00 percent,

1. determine the current market price for a Treasury note having 3 years to maturity and an annual coupon rate (and payment) of 6.5 percent.
2. determine the annualized yield to maturity for the 6.5 percent (coupon) Treasury note

having 3 years to maturity