A $1,000 Face Value Treasury bond with 18 months left to maturity has annual coupons of $32 paid semi-annually. The Term Structure of Interest shows that th 6 month YTM is 3.2%, the 12 month YTM is 3.32% and the 18 month YTM is 3.53%. What is the price of the bond? [Hint: The price of the bond should be the same as the total price of the STRIPS that can be created from it.]

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
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A $1,000 Face Value Treasury bond with 18 months left to maturity has annual
coupons of $32 paid semi-annually. The Term Structure of Interest shows that th
6 month YTM is 3.2%, the 12 month YTM is 3.32% and the 18 month YTM is
3.53%.
What is the price of the bond? [Hint: The price of the bond should be the same as
the total price of the STRIPS that can be created from it.]
Transcribed Image Text:1 A $1,000 Face Value Treasury bond with 18 months left to maturity has annual coupons of $32 paid semi-annually. The Term Structure of Interest shows that th 6 month YTM is 3.2%, the 12 month YTM is 3.32% and the 18 month YTM is 3.53%. What is the price of the bond? [Hint: The price of the bond should be the same as the total price of the STRIPS that can be created from it.]
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