A US Treasury bond has a face value of $10,000 and two years to maturity. It...

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A US Treasury bond has a face value of $10,000 and two years to maturity. It has a coupon rate of 3.50% per year and coupons are paid semi-annually. According to the Treasury yield curve, the current market rate for equivalent maturities is 2.20%. What is the bond's price today? Use the bond pricing formula (discounting of cash flows) AND the PVA formula. Is this bond priced at a premium, at a discount, or at par? Why? Show all your work. A US Treasury bond has a face value of $10,000 and two years to maturity. It has a coupon rate of 3.50% per year and coupons are paid semi-annually. According to the Treasury yield curve, the current market rate for equivalent maturities is 2.20%. What is the bond's price today? Use the bond pricing formula (discounting of cash flows) AND the PVA formula. Is this bond priced at a premium, at a discount, or at par? Why? Show all your work.

Answer rating: 100% (QA)

Solution Face Value 10000 Coupon Payment 10000 x 3502 1750 Period 2 years x 2 4 Rate 2202 110 Bonds ... View the full answer