a) If the required interest rate is 11%, what is the present value of the coupon payments that the firm is able to pay? What is the present value of the par that the firm is able to pay? b) What should the bond be selling at? c) What is the stated yield-to-maturity (YTM) of the bond?

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A:

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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.