Suppose that the term structure of interest rates is Maturity (years) Period i 1 2 3...
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Suppose that the term structure of interest rates is Maturity (years) Period i 1 2 3 4 5 6 7 8 9 10 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 T yo 4.8995% 4.8455% 4.9169% 4.9910% 5.0770% 5.1634% 5.2309% 5.2989% 5.3567% 5.4152% A 30-year Treasury bond was issued 28 years ago and a 10-year Treasury note was issued 8 years ago (so that they have the same final maturity). The 30-year Treasury bond pays a semi-annual coupon at a 10.625% annual rate. The 10-year Treasury note pays a semi-annual coupon at 4.25% annual rate. What is the spread between the yield-to-maturity of the two bonds? Suppose that the term structure of interest rates is Maturity (years) Period i 1 2 3 4 5 6 7 8 9 10 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 T yo 4.8995% 4.8455% 4.9169% 4.9910% 5.0770% 5.1634% 5.2309% 5.2989% 5.3567% 5.4152% A 30-year Treasury bond was issued 28 years ago and a 10-year Treasury note was issued 8 years ago (so that they have the same final maturity). The 30-year Treasury bond pays a semi-annual coupon at a 10.625% annual rate. The 10-year Treasury note pays a semi-annual coupon at 4.25% annual rate. What is the spread between the yield-to-maturity of the two bonds?
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