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https://treasurydirect.gov/indiv/indiv.htm

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a. Bond Prices and Credit Risk (i) (ii) Go to the Government Treasury Site (https://treasurydirect.gov/indiv/indiv.htm) from where individuals can open an account and buy government bonds without transactions costs. Provide a table that describes the types of government securities available with the following rows and columns: Description Security T- Bill T-Note T-Bond FRN I-Bonds TIPS STRIPS Typical Maturity Auction Frequency Which bond do you think is most likely to fluctuate more with changes in interest rates? Why? Which bond will fluctuate least? Why? Suppose you purchase $1000 face-value of each of the following two bonds. Bond A: 3% Coupon rate, Treasury Bond, with semi-annual coupon payments, 30-year maturity and yield to maturity 4% quoted as an APR with semi-annual compounding. Bond B: Ford Motor 6% Coupon, with semi-annual coupon payments, 10-year maturity and a spread of 2% over the 30-year Treasury Bond yield, quoted as an APR with semi-annual compounding. a. Bond Prices and Credit Risk (i) (ii) Go to the Government Treasury Site (https://treasurydirect.gov/indiv/indiv.htm) from where individuals can open an account and buy government bonds without transactions costs. Provide a table that describes the types of government securities available with the following rows and columns: Description Security T- Bill T-Note T-Bond FRN I-Bonds TIPS STRIPS Typical Maturity Auction Frequency Which bond do you think is most likely to fluctuate more with changes in interest rates? Why? Which bond will fluctuate least? Why? Suppose you purchase $1000 face-value of each of the following two bonds. Bond A: 3% Coupon rate, Treasury Bond, with semi-annual coupon payments, 30-year maturity and yield to maturity 4% quoted as an APR with semi-annual compounding. Bond B: Ford Motor 6% Coupon, with semi-annual coupon payments, 10-year maturity and a spread of 2% over the 30-year Treasury Bond yield, quoted as an APR with semi-annual compounding.

Answer rating: 100% (QA)

a Bond Prices and Credit Risk i Table of government securities from TreasuryDirectgov Security Descr... View the full answer