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The table below provides information about treasury bonds. Bond Number Bond Principal ($) Time to Maturity (months) Annual Coupon (%) Market Price ($) 1 100
The table below provides information about treasury bonds.
Bond Number | Bond Principal ($) | Time to Maturity (months) | Annual Coupon (%) | Market Price ($) |
1 | 100 | 6 | 3 | 98 |
2 | 100 | 12 | 5 | 97 |
3 | 100 | 18 | 0 | 85 |
- Calculate zero rates (based on continuous compounding) for 6, 12, and 18 months and graph the treasury yield curve and provide your answers in the following table:
- Estimate the price of an 18-month Treasury bond that pays a coupon of 6%.
Bond 1 | Zero Rate |
1 | 0.070183 |
2 | 0.08035 |
3 | 0.108346 |
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