A 28-year U.S. Treasury bond with a face value of $1,000 pays a coupon of 5.25% (2.625% of face value every six months). Thereported yield to maturity is 5.0% (a six-month discount rate of 5.0/2 = 2.5%).a. What is the present value of the bond?b. If the yield to maturity changes to 1%, what will be the present value?c. If the yield to maturity changes to 8%, what will be the present value?d. If the yield to maturity changes to 15%, what will be the present value?(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places.)a.Present valueb.Present valueC.Present valued. Present value

Par value of bond = $ 1000 Coupon rate = 5.25% Semi annual coupon amount = 1000*2.625% = $ 26.50…

Answered: A 28-year U.S. Treasury bond with a…

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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