The British government has a bond outstanding that pays £100 in interest each year for 18 years. Assuming that the current interest rate in Great Britain is 5% and that you will receive your first interest payment next year. What is the value of the government bond if norminal value of the bond is £1,000?

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.