Question: A ten-year Treasury note with a 5.000% coupon rate is sold at par value in the primary market (assume par value is $100). Bill purchases
A ten-year Treasury note with a 5.000% coupon rate is sold at par value in the primary market (assume par value is $100). Bill purchases the Treasury note at a price of 103.000 when it has five years left to maturity and it has a 4.326% yield-to-maturity. Bill holds the Treasury note for one year and then sells it in the secondary market to George who will hold the T-note to maturity. Assume one year from when Bill purchases the Treasury note, yield-to-maturities interest rates) are: 2.840% on T-notes with 6-months to maturity 3.100% on T-notes with 1-year to maturity 3.250% on T-notes with 2-years to maturity 3.400% on T-notes with 3-years to maturity 3.660% on T-notes with 4-years to maturity 3.800% on T-notes with 5-years to maturity 4.270% on T-notes with 10-years to maturity Complete the time line for the original ten-year Treasury bond. The time line must show only numbers unless it is an unknown variable in which case you can show it as a question mark (?). 0 1 2 ----V.......... Complete the time line for George's Treasury note (while owned by George). The time line must show only numbers unless it is an unknown variable in which case you can show it as a question mark (?). 0 1 2 ----------------------- A ten-year Treasury note with a 5.000% coupon rate is sold at par value in the primary market (assume par value is $100). Bill purchases the Treasury note at a price of 103.000 when it has five years left to maturity and it has a 4.326% yield-to-maturity. Bill holds the Treasury note for one year and then sells it in the secondary market to George who will hold the T-note to maturity. Assume one year from when Bill purchases the Treasury note, yield-to-maturities interest rates) are: 2.840% on T-notes with 6-months to maturity 3.100% on T-notes with 1-year to maturity 3.250% on T-notes with 2-years to maturity 3.400% on T-notes with 3-years to maturity 3.660% on T-notes with 4-years to maturity 3.800% on T-notes with 5-years to maturity 4.270% on T-notes with 10-years to maturity Complete the time line for the original ten-year Treasury bond. The time line must show only numbers unless it is an unknown variable in which case you can show it as a question mark (?). 0 1 2 ----V.......... Complete the time line for George's Treasury note (while owned by George). The time line must show only numbers unless it is an unknown variable in which case you can show it as a question mark (?). 0 1 2
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