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Please type responses Suppose the U.S. Treasury issued $500 million face value of 10 year, 7.5% bonds on January 15 , 2005 at par value.
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Suppose the U.S. Treasury issued $500 million face value of 10 year, 7.5% bonds on January 15 , 2005 at par value. Coupon interest is paid semi-annually with the face value due in 10 years (1/15/2015) a. On January 14, 2006, this bond is priced in the market to yield a stated 8%, using semiannual compounding. Calculate the correct price you will pay for the bond on 1/15/2006, for each $100 of face value. b. If, on the other hand, the stated yield-to-maturity of these bonds is 7%, what is their price (per $100 face value)? Suppose the U.S. Treasury issues $1,000 million face value, 7.5%,30-year bonds on January 15 , 2006. Coupon interest is paid semi-annually with the face value payable in 30 years (1/15/2036). a. If these bonds are priced in the market at 94 on the issue date (i.e. $94 purchase price for each $100 of face value on 1/15/2006 ), what is the stated yield to maturity? b. If the price is 101 , what is the stated yield to maturity? c. What is the general relationship among price, coupon, yield and par valueStep by Step Solution
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