Question
On 3/31/19, you buy $100,000 face amount of a new issue treasury note with a 2.70% coupon at par. The notes mature on 3/31/29. Bear
On 3/31/19, you buy $100,000 face amount of a new issue treasury note with a 2.70% coupon at par. The notes mature on 3/31/29. Bear in mind that treasury notes, and most notes and bonds, pay a coupon every six months.
(You have to answer the following questions with numbers and logic; you cant fall back on your instructors time-tested, and doubtless true, answer that We cant predict the future!)
Is this note callable? How do you know? (1 point)
b. On 3/31/20, the 9 year treasury yield is 2.45%. What is the market value of your notes? (5 points)
c. What is the total return on your investment in this note, in dollars and percentage, on 3/31/20? (3 points)
d. What is the current yield on the notes on 3/31/20? (2 points)
e. On 3/31/21, the 8 year treasury yield is 2.98%. What is the market value of your notes? (5 points)
f. What is the total return on your investment in this note, in dollars and percentages, on 3/31/21? (3 points)
g. What is the current yield on the notes on 3/31/21? (2 points)
h. Is it good for you, as a note holder, that the current yield has gone up? (1 point)
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