Flight-to-safety, is a financial market phenomenon occurring when investors sell what they perceive to be higher-risk investments and purchase safer investments, such as gold and US treasury bonds (Wikipedia). When you heard Wuhan was locked down on Jan 22, 2020 (the first city in China being locked down), in fear of the spreading out the fatal virus, you decide to purchase 10-year US treasury note. YTM of available 10-year US treasury note was around 1.70% (annualized rate), with coupon rate of 1.12% (annualized rate). Coupon is paid every 6 months. 6 months later the YTM of the same bond drops to 0.64% (right before the first coupon payment). Assuming the maturity date of the bond you invested is Jan 22, 2030. With the information above, please answer the following four questions. Q:What is the bond price when you invested? (hint: calculate half-year discount rate and coupon payment first. Face value of US 10-year treasury note is $1000.)
15) Flight-to-safety, is a financial market phenomenon occurring when investors sell what they perceive to be higher-risk investments and purchase safer investments, such as gold and US treasury bonds (Wikipedia). When you heard Wuhan was locked down on Jan 22, 2020 (the first city in China being locked down), in fear of the spreading out the fatal virus, you decide to purchase 10-year US treasury note.
YTM of available 10-year US treasury note was around 1.70% (annualized rate), with coupon rate of 1.12% (annualized rate). Coupon is paid every 6 months. 6 months later the YTM of the same bond drops to 0.64% (right before the first coupon payment). Assuming the maturity date of the bond you invested is Jan 22, 2030.
With the information above, please answer the following four questions.
Q:What is the
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