Problem 2 - Reading bond tables Consider the following information from the Treasury bond table: Asked Maturity Coupon Bid 7/15/2021 2.1% 100.1600 100.2480 Asked Yield 1.3% a. What is the asked price of the bond that matures on 7/15/2021 and has a face value of $500? b. What is its coupon and current yield? c. What its the yield to maturity?
Problem 2 - Reading bond tables Consider the following information from the Treasury bond table: Asked Maturity Coupon Bid 7/15/2021 2.1% 100.1600 100.2480 Asked Yield 1.3% a. What is the asked price of the bond that matures on 7/15/2021 and has a face value of $500? b. What is its coupon and current yield? c. What its the yield to maturity?
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
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Transcribed Image Text:### Problem 2 - Reading Bond Tables
Consider the following information from the Treasury bond table:
| Maturity | Coupon | Bid | Asked | Asked Yield |
|-------------|--------|----------|----------|-------------|
| 7/15/2021 | 2.1% | 100.1600 | 100.2480 | 1.3% |
a. **What is the asked price of the bond that matures on 7/15/2021 and has a face value of $500?**
b. **What is its coupon and current yield?**
c. **What is the yield to maturity?**
#### Explanation of the Table:
The table provides key information related to a specific Treasury bond, including its maturity date, coupon rate, bid price, asked price, and asked yield.
- **Maturity Date**: 7/15/2021
- **Coupon Rate**: 2.1%
- **Bid Price**: The price at which buyers are willing to purchase the bond, which is 100.1600.
- **Asked Price**: The price at which sellers are willing to sell the bond, which is 100.2480.
- **Asked Yield**: The yield on the bond based on the asked price, which is 1.3%.
### Problem Questions:
1. **Asked Price Calculation**:
- You need to calculate the asked price of the bond for a face value of $500 using the given asked price per $100.
2. **Coupon and Current Yield**:
- Determine the bond's coupon and calculate the current yield based on the given data.
3. **Yield to Maturity**:
- Calculate the yield to maturity, taking into account the given asked yield and other relevant data.
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