Locate the Treasury bond in Figure 5.4 that matures in August 2028. What is its coupon rate?
Question:
In figure 5.4
Par ValuePar value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
Treasury Bonds Asked Maturity 3/31/2016 1/31/2017 4/15/2018 4/30/2018 Chg yleld Coupon Bld Asked 2.375 100.1953 100.2109 -0.0313 0.34 0.875 100.2813 100.2969 0.0078 0.558 0.75 0.779 99.9219 99.9375 -0.0547 0.625 99.6328 99.6484 -0.0703 0.787 5/15/2019 5/31/2020 6/30/2021 8/15/2022 8/15/2023 11/15/2024 8/15/2025 2/15/2026 2/15/2027 8/15/2028 2/15/2029 5/15/2030 2/15/2031 2/15/2036 3.125 106.8984 106.9141 -0.0625 0.945 1.375 100.8594 100.875 -0.0625 1.164 2.125 104.1563 104.1719 0.0156 1.315 7.25 135.8906 135.9063 -0.0313 1.429 2.5 106.8125 106.8281 0.0625 1.531 2.25 104.5078 104.5234 0.125 1.69 1.705 6.875 145.0703 145.0859 0.0469 1.625 98.875 98.8906 0.1172 1.747 1.804 6.625 147.7656 147.8281 0.1094 5.5 139.5156 139.5781 0.1406 1.919 5.25 137.6094 137.6719 0.1328 1.951 152.7969 6.25 152.7344 0.1641 1.975 143.5625 1.992 5.375 143.625 0.2422 4.5 138.2656 138.3281 0.3906 2.134 4.75 2/15/2037 142.6641 142.7266 0.3594 2.197 2/15/2038 8/15/2039 5/15/2040 11/15/2041 0.4375 4.375 136.2188 136.2813 2.269 138.125 4.5 138.0625 0.4688 2.373 4.375 135.6797 135.7109 0.3984 2.419 3.125 112.1641 112.1953 0.4766 2.481 8/15/2042 2.75 104.0234 104.0547 0.5156 2.539 5/15/2044 3.375 116.7656 116.7969 0.5859 2.538 8/15/2045 11/15/2045 2/15/2046 2.875 105.6484 105.6797 0.5781 2.598 108.4844 3 108.5156 0.6016 2.588 2.5 97.8281 97.8594 0.5391 2.603
Step by Step Answer:
The coupon rate located in the second column of the quote is 5500 The bid price is ...View the full answer
Corporate Finance Core Principles and Applications
ISBN: 978-1259289903
5th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Related Video
Bond valuation is the process of determining the worth of a bond. It is based on the present value of the bond\'s future cash flows, which include coupon payments and the return of the bond\'s face value (or \"principal\") at maturity. The discount rate used in the calculation is directly tied to prevailing interest rates, and a rise in interest rates will decrease the present value of the bond and thus lower its price. Conversely, a fall in interest rates will increase the present value of the bond and raise its price. Interest rates serve as a benchmark for determining the value of a bond, as they determine the discount rate used in the bond valuation calculation. The most commonly used measure of interest rates is the yield to maturity (YTM), which represents the internal rate of return of an investment in a bond if the investor holds the bond until maturity and receives all scheduled payments. Yield to maturity is a function of the coupon rate, the current market price of the bond, the face value of the bond, and the number of years remaining until maturity. By comparing the yield to maturity of a bond to prevailing market interest rates, an investor can assess the relative value of the bond.
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