Suppose you bought a year ago a $10,000 ten-year treasury note with $400 annual coupon, i.e.,...

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Suppose you bought a year ago a $10,000 ten-year treasury note with $400 annual coupon, i.e., interest rate of 4% per annum compounded annually. You have already received the first coupon payment, so you are holding in effect a $10,000 treasury note with nine-year maturity. Suppose further that the market interest rate on nine-year treasury notes has now gone up to 5% (again, per annum with annual compounding) What is your treasury note worth? How much would it be worth if the interest rate had instead gone down to 3%? Suppose you bought a year ago a $10,000 ten-year treasury note with $400 annual coupon, i.e., interest rate of 4% per annum compounded annually. You have already received the first coupon payment, so you are holding in effect a $10,000 treasury note with nine-year maturity. Suppose further that the market interest rate on nine-year treasury notes has now gone up to 5% (again, per annum with annual compounding) What is your treasury note worth? How much would it be worth if the interest rate had instead gone down to 3%?

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Certainly Lets calculate the present value of the t... View the full answer