A 2-year treasury note (= bond) with $3 semiannual coupons was issued on April 20, 2019. Coupon dates are April 20 and October 20. The yield rate is 10% compounded semiannually (F-C-$100). Determine the price on June 5, 2020. Round the answer to the nearest tenth dollar.

A 2-year treasury note (= bond) with $3 semiannual coupons was issued on April 20, 2019. Coupon dates are April 20 and October 20. The yield rate is 10% compounded semiannually (F-C-$100). Determine the price on June 5, 2020. Round the answer to the nearest tenth dollar.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

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.

Question

A 2-year treasury note (= bond) with $3 semiannual coupons was issued on April 20, 2019. Coupon
dates are April 20 and October 20. The yield rate is 10% compounded semiannually (F-C-$100).
Determine the price on June 5, 2020.
Round the answer to the nearest tenth dollar.

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