IN THE NEWS Treasury Prices Fall with Improved Expectations Expectations of accelerated economic growth continue to boost yields on Treasury securities. The price of the Treasury's 2.0 percent 10-year bond fell $17.43 yesterday, from $843.88 to $826.45. The decline in the price of the treasury pushed the yield up from 2.37 percent to 2.42 percent. The 30-year bond also declined, increasing the yield from 2.96 to 3.00. Source: Market reports of January 6, 2017.

IN THE NEWS Treasury Prices Fall with Improved Expectations Expectations of accelerated economic growth continue to boost yields on Treasury securities. The price of the Treasury's 2.0 percent 10-year bond fell $17.43 yesterday, from $843.88 to $826.45. The decline in the price of the treasury pushed the yield up from 2.37 percent to 2.42 percent. The 30-year bond also declined, increasing the yield from 2.96 to 3.00. Source: Market reports of January 6, 2017.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Rework part (f), assuming that Annie holds the bond for 10 years and sells it when the required return is 7.0%. Compare your finding to that in part (f), and comment on the bond's maturity risk. PV= 1,000 N=10 I/Y= 7% Assume that Annie buys the bond at its current price of $983.80 and holds it until maturity. What will her current yield and yield to maturity (YTM) be, assuming annual interest? After evaluating all of the issues raised above, what recommendation would you give Annie with regard to her proposed investment in the Atilier Industries bonds?
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