A government bond has coupon yield 10.9%, face value of 4000 EUR, and maturity in 2026. The coupons are paid yearly. Today is 2022, and we just received a coupon. The government yield curve for time-to-maturity 4 years shows a yield of 5.0%. 1. What is the fair price of the bond today? 2. What is the duration of the bond?

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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.