Question: 1. Bond prices, yield to maturity, and returns ( 30 points ) Walk through details of bond YTM, price: You are considering a Treasury note

1. Bond prices, yield to maturity, and returns (30 points) Walk through details of bond YTM, price:

You are considering a Treasury note that matures in 7 years, has a coupon of 4.25%, makes semiannual coupon payments, and has face value of 1000 beginning of 2023.

What are the bonds cash flows?

If the bonds yield today (2023) is equal to 4.75% what would the price be?

We have a rough economic landing so that Market conditions are volatile, end of 2023/24 -- one year since purchase at end of 2022/23; and slow recovery so that the bond price (quoted as a percentage of par) is now equal to 984.40. What is the new yield to maturity?

Given the change in price and yields What is the return on your investment over the past year (assuming that you bought at the price in b.)? and price of bond goes up or down, depending on the YTM in c. HOW would annual return Change IF you put down only 20% equity and borrowed the rest at 4%. (Calculate Return on equity- borrowing costs)

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