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solve all 5 parts please! Intro Treasury spot rates are as follows in today's market: 1 2 3 Maturity (years) Spot rate 1.6% 2.8% 3.9%
solve all 5 parts please!
Intro Treasury spot rates are as follows in today's market: 1 2 3 Maturity (years) Spot rate 1.6% 2.8% 3.9% Part 1 * Attempt 1/3 for 10 pts. One year ago, a 3-year Treasury note ($1,000 face value, 4.8% coupon rate and pays annual coupon) was issued and today it has two years left to maturity and two cashflows left to pay. What is the fair value today of this security? 0+ decimals Submit * Attempt 1/2 for 10 pts. Part 2 If this security is fairly priced in today's market, what can you tell about the YTM? Check all that apply: 2.8% > YTM> 1.6% YTM is the complex average of 1-yr, 2-yr and 3-yr Treasury spot rates 3.9% > YTM > 2.8% OYTM 3.9% Submit Part 3 * Attempt 1/3 for 10 pts. Now compute the yield to maturity and check with Part 2. 4+ decimals Submit Part 4 | Attempt 1/2 for 10 pts. What if this security is under-priced but greater than $1,000 in today's market, what must be true about the YTM? Check all that apply: YTM 3.9% OYTM YTM > 2.8% OYTM YTM > 1.6% Submit Part 5 | Attempt 1/3 for 10 pts. Following Part 4, it is under-priced but greater than $1,000, suppose at a market price of $1,015, what is the YTM? (check if consistent with your predictions in Part 4) 4+ decimals SubmitStep by Step Solution
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