Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with two years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 11.00%.

Using this information and ignoring the other costs involved, calculate the value of the Treasury note:

$1,031,752.80

$730,824.90

$541,670.22

$859,794.00

Based on your calculations and understanding of semiannual coupon bonds, complete the following statements:

Assuming that interest rates remain constant, the T-notes price is expected to ________

. The T-note described is selling at a ________ .

When valuing a semiannual coupon bond, the time period variable (N) used to calculate the price of a bond reflects the number of ______ periods remaining in the bonds life.