Question $17$

A $5$ year Treasury bond $($TBOND $1)$ is sold onto the market at $$100$ with an annual

coupon of $$4.$ But good news hits the market such that a new $10$ year Treasury bond

$($TBOND $2)$ hits the market the following day at an annual coupon of $$3.$ Using the

method employed in class $($ie do not use the answer given by a financial

calculator $!)$ What is an appropriate price to the nearest dollar $($above $0\mathrm{.}5$ round up

below $0\mathrm{.}5$ round down$)$ for TBOND $1$ in the secondary market?

A$)$ $$104$

B$)$ $$105$

C$)$ $$106$

D$)$ $$107$

E$)$ $$108$