Question: #1 or all please answer #1 or all please. 1. Consider a newly issued TIPS security with par value $10,000 and 2.6% coupon rate (paid
1. Consider a newly issued TIPS security with par value $10,000 and 2.6% coupon rate (paid semiannually). i. If inflation over the next 6 months turns out to be 3.0% (on annualized basis), what is the dollar coupon interest that will be paid in 6 months? ii. If inflation turns out to be 2.0% (annualized) over the following 6 month period, what is the dollar coupon interest that will be paid in 1 year? 2. A T-bill matures in 60 days, has par value $10,000, and is quoted at 3%. Compute its i. dollar price ii. quoted price 3. Suppose the Treasury is offering $8 billion worth of 10-year notes to competitive bidders in a Treasury auction, and the competitive bids submitted are: Submitted yield (%) 1.2 Submitted amount (S, in billions) 2.0 1.4 2.5 1.8 1.5 2.0 6.0 2.2 8.0 What will be the coupon rate? ii. What will be its price? Express as a percentage of par to 2 decimal places, 1. Consider a newly issued TIPS security with par value $10,000 and 2.6% coupon rate (paid semiannually). i. If inflation over the next 6 months turns out to be 3.0% (on annualized basis), what is the dollar coupon interest that will be paid in 6 months? ii. If inflation turns out to be 2.0% (annualized) over the following 6 month period, what is the dollar coupon interest that will be paid in 1 year? 2. A T-bill matures in 60 days, has par value $10,000, and is quoted at 3%. Compute its i. dollar price ii. quoted price 3. Suppose the Treasury is offering $8 billion worth of 10-year notes to competitive bidders in a Treasury auction, and the competitive bids submitted are: Submitted yield (%) 1.2 Submitted amount (S, in billions) 2.0 1.4 2.5 1.8 1.5 2.0 6.0 2.2 8.0 What will be the coupon rate? ii. What will be its price? Express as a percentage of par to 2 decimal places
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