Locate the Treasury bond in Figure 8.5 maturing in September 2025. Assume a par value of $10,000. Is this a premium or a discount bond? O Discount bond Premium bond a. What is its current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is its yield to maturity? (Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places, e.g., 32.161.) c. What is the bid-ask spread in dollars? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Current yield b. YTM c. Bid-ask spread % %
Locate the Treasury bond in Figure 8.5 maturing in September 2025. Assume a par value of $10,000. Is this a premium or a discount bond? O Discount bond Premium bond a. What is its current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is its yield to maturity? (Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places, e.g., 32.161.) c. What is the bid-ask spread in dollars? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Current yield b. YTM c. Bid-ask spread % %
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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Transcribed Image Text:S
Locate the Treasury bond in Figure 8.5 maturing in September 2025. Assume a par
value of $10,000.
Is this a premium or a discount bond?
O Discount bond
O Premium bond
a. What is its current yield? (Do not round intermediate calculations and enter your
answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. What is its yield to maturity? (Do not round intermediate calculations and enter your
answer as a percent rounded to 3 decimal places, e.g., 32.161.)
c. What is the bid-ask spread in dollars? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
a. Current yield
b. YTM
c. Bid-ask spread
%
%
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Transcribed Image Text:Figure 8.5 Sample Wall Street Journal U.S. Treasury Bond Prices
Maturity
7/15/2021
Coupon
2.625
Change
-0.002
2/28/2022
1.125
-0.004
1/15/2023
-0.016
1.5
2.375
3
1.875
1.5
2.875
5.25
0.625
0.625
5.375
8/15/2024
9/30/2025
7/31/2026
1/31/2027
8/15/2028
2/15/2029
5/15/2030
8/15/2030
2/15/2031
2/15/2036
5/15/2038
11/15/2039
8/15/2040
11/15/2041
8/15/2042
5/15/2043
5/15/2044
8/15/2045
11/15/2046
2/15/2047
5/15/2049
8/15/2050
4.5
4.5
4.375
1.125
3.125
2.75
2.875
3.375
2.875
2.875
3
2.875
1.375
Bid
102.062
101.146
103.056
108.162
113.214
108.262
106.282
118.116
139.054
99.316
99.246
148.094
153.074
158.102
158.036
99.266
137.004
129.304
132.136
143.092
133.186
134.234
137.286
136.314
100.202
Source: www.wsj.com, August 24, 2020.
Asked
102.066
101.152
103.062
108.166
113.22
108.266
106.286
118.126
139.064
100.006
99.256
148.104
153.094
158.122
158.056
99.286
137.024
130.004
132.156
143.112
133.206
134.254
137.306
137.014
100.222
-0.022
-0.042
-0.03
-0.002
-0.03
-0.03
-0.72
-0.046
-0.086
-0.062
-0.082
-0.068
-0.016
-0.032
-0.718
-0.01
-0.008
-0.006
0.02
0.016
0.018
0.02
Asked Yield
0.134
0.15
0.159
0.219
0.293
0.368
0.412
0.517
0.515
0.623
0.645
0.606
0.824
0.922
1.031
1.131
1.151
1.193
1.231
1.256
1.294
45
W
1.304
1.301
1.321
1.347
6
Expert Solution
Step 1
Data given:
Maturity Date: 9/30/2025
Coupon=3%
Bid=113.214
Asked=113.22
Change=-0.042
Asked Yield=0.293%
Par value=$10,000
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