You own 30-year Treasury Bonds that you bought exactly 6 years ago. At the Bonds when they were issued), the 30-year T-Bond yield was 3.75% APR (compounded semi- annually). That yield was also the coupon rate used to compute the semi-annual coupon payments (the T-Bonds were issued exactly at par). The T-Bonds have a total face value of $50,000. You just received an interest payment, and the bonds will mature in exactly 24 years. Today's yield for such a long-maturity T-Bond is 1.40% (APR, compounded semi-annually). a. What is the current market value of your T-Bonds? b. By what percentage has the value of your T-Bonds increased or decreased since you bought them?
You own 30-year Treasury Bonds that you bought exactly 6 years ago. At the Bonds when they were issued), the 30-year T-Bond yield was 3.75% APR (compounded semi- annually). That yield was also the coupon rate used to compute the semi-annual coupon payments (the T-Bonds were issued exactly at par). The T-Bonds have a total face value of $50,000. You just received an interest payment, and the bonds will mature in exactly 24 years. Today's yield for such a long-maturity T-Bond is 1.40% (APR, compounded semi-annually). a. What is the current market value of your T-Bonds? b. By what percentage has the value of your T-Bonds increased or decreased since you bought them?
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
Related questions
Question
Transcribed Image Text:1. You own 30-year Treasury Bonds that you bought exactly 6 years ago. At the time (you bought the T-
Bonds when they were issued), the 30-year T-Bond yield was 3.75% APR (compounded semi-
annually). That yield was also the coupon rate used to compute the semi-annual coupon payments (the
T-Bonds were issued exactly at par). The T-Bonds have a total face value of $50,000.
You just received an interest payment, and the bonds will mature in exactly 24 years. Today's yield for
such a long-maturity T-Bond is 1.40% (APR, compounded semi-annually).
a. What is the current market value of your T-Bonds?
b. By what percentage has the value of your T-Bonds increased or decreased since you bought them?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education