Question
Use the following Treasury quote to answer the following questions. Maturity Coupon Rate (%) Bid Price Asked Price Asked Yield (%) 5/15/2040 4.375 158.0640 158.0840
Use the following Treasury quote to answer the following questions.
Maturity | Coupon Rate (%) | Bid Price | Asked Price | Asked Yield (%) |
5/15/2040 | 4.375 | 158.0640 | 158.0840 | 1.131 |
1. Is the bond selling at discount, par, or premium? |
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2. What price would an investor pay to buy the bond? |
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3. What would be the total cost for an investor to buy $1,000 of par value? |
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4. What price would a dealer pay to buy the bond? |
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5. What would be the total cost for a dealer to buy $1,000 of par value? |
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6. If a dealer bought and sold $1,000,000 of par value, how much would the dealer earn? |
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7. Explain how you know the Treasury that matures in 2040 is a bond rather than a note.
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