the information regarding the domestic government fixed-interest bond market is tha the current price of a 2-year zero-coupon bond is £97 per £100 nominal, the 2-year forward rate at time t=2 is 4.6% and the 4-year par yield is 4.1%. Hence, calculate,  the current price of a 4-year bond of £20,000 nominal paying coupons at a rate of 5% per annum and redeemed at 115%.

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A: Step 1:Step 2:Step 3:Step 4:

Q: A 5-year government bond has an annual coupon of calculate: a) the price, b) Macaulay duration and;…

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Q: 3. A government bond with 2 years until maturity has a face value of £120,000 and an annual nominal…

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Q: A bond, paying semi-annual coupons of 3% per annum, matures in 7 months time. The interest rate…

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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.