Question #$6$: Yield$-$to$-$Maturity $[14$ Points$]$

Consider various U$.$S$.$ Treasury bonds that each pay a $4\mathrm{.}5\%$ annual coupon rate and have a face value of $$1000.$

$($a$)$ Complete the table below. Show your work. $[6$ Points$]$

$\backslash$table$[[,$Years to Maturity,Yield$-$to$-$Maturity,Current Bond Price$],[$Treasury Bond #$1,12,4\mathrm{.}5\%,],[$Treasury Bond #$2,12,6\mathrm{.}0\%,],[$Treasury Bond #$3,12,7\mathrm{.}5\%,]]$

$($b$)$ Based on the table in Part $($a$),$ describe the relationship between current bond price and yieldto maturity. $[1$ Point$]$

Page $3$ of $4$

$($c$)$ Consider various U$.$S$.$ Treasury bonds that each pay a $4\mathrm{.}2\%$ annual coupon rate and have a face value of $$1000.$ Complete the table below. Show your work. $[6$ Points$]$

$\backslash$table$[[,$Years to Maturity,Yield$-$to$-$Maturity,Current Bond Price$],[$Treasury Bond #$1,4,6\%,],[$Treasury Bond #$2,8,6\%,],[$Treasury Bond #$3,12,6\%,]]$

$($d$)$ Based on the table in Part $($c$),$ describe the relationship between years to maturity and the current bond price. $[1$ Points$]$