A newly issued U . S . Federal T - Note matures in exactly five years. The
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Question:
A newly issued US Federal TNote matures in exactly five years. The coupon rate is and coupons are paid semiannually. The bond is priced at $FV $ and yields The economy is slowing and many forecasters predict a recession. You expect that the monetary authorities will relax monetary policy which will cause interest rates to fall. You expect the yield on the year bond to fall to You want to earn $M by investing in bonds to profit from the interest rate change, how many bonds do you buy? When calculating profit, round the new price of the bond to two decimal places.
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