Currently interest rates on US Treasury Bills and Bonds are at historical lows. With short-term interest rates
Question:
Currently interest rates on US Treasury Bills and Bonds are at historical lows. With short-term interest rates near zero, a significant portion of outstanding government debt has been issued with less than a 2-year maturity. The yield curve of pure discount bond government debt is currently as follows:
Maturity
6-month 1 year 2 years 3 years 4 years 5 years
Annual Yield 0.19% 0.25% 0.53% 0.86% 1.32%
Question:
The US Treasury just issued a pure discount bond with five years to maturity. It has a $10,000 face value and the price in the market was $9,124.20. What is the yield to maturity on the bond?
If the US Treasury issued a 5-year treasury bond with a $10,000 face value and a 1.5% coupon rate, what do you estimate would be the price of this coupon bond in the market?
The Congressional Budget Office forecasts that the national debt outstanding will total $24.5 trillion at the end of 2023. Given the interest rate forecasts if all of that debt had a 1-year maturity, issued at the end of 2023, what is your forecast of interest expense for this debt during 2024?