Assume a $1,000 par value for the 2042 May 15, 3.00% coupon Treasury bond for the date
Question:
Assume a $1,000 par value for the 2042 May 15, 3.00% coupon Treasury bond for the date February 25, 2021 presented below. (Note that this bond has semi-annual coupon payments).
Maturity: 5/15/2024
coupon: 3.00
Bid: 114.125
Asked: 114.238
Asked yield: 2.160
Using the above dealer price quote, calculate and verify the Asked (Price) presented above using the discounting and compounding techniques we reviewed in class. You may use Excel functions as a check on your answer but not to answer the question. Assume there are 181 days between coupon payments. Is this the clean or dirty price? (Note - the price you calculate may be up to $0.05 off per $1,000 par).
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello