A 10-year government bond has face value of OR 200 and a coupon rate of 6% paid semiannually. Assume that the interest rate is equal to 8% per year. What is the bond’s price? What is the reason for the difference in price on an annual and semiannually basis? Discuss the role of financial managers.

Q: maturity and 4.1% for a three-year maturity (all effective annual rates). Suppose that someone is…

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A: given information face value = 8000 time period to mature = 12 interest rate = 8%

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A: (C) . decrease ; increase

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Q: rate of return of the bond? W

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.