Question: A 1 0 - year U . S . Treasury bond with a face value of $ 1 , 0 0 0 pays a coupon

A 10-year U.S. Treasury bond with a face value of $1,000 pays a coupon of 5.5%(2.75% of face value every six months). The reported yield to maturity is 5.2%(a six-month discount rate of 5.2/2=2.6%).
a. What is the present value of the bond?
b. Generate a graph or table showing how the bonds present value changes for semiannually compounded interest rates between 1% and 15%.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!