Assume that today is November 15, 2016 and there are exactly 4 six-month time periods remaining until maturity for a 30-year US Treasury bond that was originally issued on November 15, 1988. The bond matures on November 15, 2018. The bond’s coupon is 8.50%. Coupons are paid semi-annually. The yield to maturity is 0.67%. The bond’s principal is $1,000. Using the PVA formula, what is the current price of the bond? Begin with the general formula. Show all your work. Is the bond priced at a premium, discount, or at par? And, why? Explain
Assume that today is November 15, 2016 and there are exactly 4 six-month time periods remaining until maturity for a 30-year US Treasury bond that was originally issued on November 15, 1988. The bond matures on November 15, 2018. The bond’s coupon is 8.50%. Coupons are paid semi-annually. The yield to maturity is 0.67%. The bond’s principal is $1,000. Using the PVA formula, what is the current price of the bond? Begin with the general formula. Show all your work. Is the bond priced at a premium, discount, or at par? And, why? Explain
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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Assume that today is November 15, 2016 and there are exactly 4 six-month time periods remaining until maturity for a 30-year US Treasury bond that was originally issued on November 15, 1988. The bond matures on November 15, 2018. The bond’s coupon is 8.50%. Coupons are paid semi-annually. The yield to maturity is 0.67%. The bond’s principal is $1,000. Using the PVA formula, what is the current price of the bond? Begin with the general formula. Show all your work. Is the
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