5. An investor creates a bond ladder by buying ten each of the 3 month, 6...
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5. An investor creates a bond ladder by buying ten each of the 3 month, 6 month, 9 month and 1 year Treasury bills (bonds). Each bill has $100 par value. U.S. Treasurys COUPON YIELD What was the price for each of the bills 10-Year Note 1-Year Bill 9-Month Bill 6-Month Bill 3-Month Bill 3.5 0 3.44 when they were bought? 4.72 0 4.904 0 4.978 After 3 months, how much interest would 'have been earned from each of the 0 5.156. maturities (the 3 month, 6 month, 9 month and 1 year maturities)? Assume the yield to maturities are the same as when the bills were bought. Remember the investor bought ten of each. Easiest way to do this is find the price of each of the bills after 3 months have gone by, then subtract the difference in the prices after 3 months and the prices when they were bought. Why does the ten year note have a lower yield then all the others in the table above? 5. An investor creates a bond ladder by buying ten each of the 3 month, 6 month, 9 month and 1 year Treasury bills (bonds). Each bill has $100 par value. U.S. Treasurys COUPON YIELD What was the price for each of the bills 10-Year Note 1-Year Bill 9-Month Bill 6-Month Bill 3-Month Bill 3.5 0 3.44 when they were bought? 4.72 0 4.904 0 4.978 After 3 months, how much interest would 'have been earned from each of the 0 5.156. maturities (the 3 month, 6 month, 9 month and 1 year maturities)? Assume the yield to maturities are the same as when the bills were bought. Remember the investor bought ten of each. Easiest way to do this is find the price of each of the bills after 3 months have gone by, then subtract the difference in the prices after 3 months and the prices when they were bought. Why does the ten year note have a lower yield then all the others in the table above?
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