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Show work on paper please You currently own a US Treasury 8 year, 4.2% semi-annual coupon bond with a $1000 face value, currently quoted at

Show work on paper please

You currently own a US Treasury 8 year, 4.2% semi-annual coupon bond with a $1000 face value, currently quoted at $95:24. The next coupon is due in 6 months.

The yield curve is currently flat (at a level youll need to determine). However, over the next 18 months, you expect the yield curve to decline by 1.50% when measured as an EAR.

For example, if the yield curve is currently flat at 6.30%EAR then in 18 months you expect it to be flat at 4.80%EA

What do you expect the bond to be selling for 18 months from today?

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