The current yield on a 1 year treasury bond is .91% and the current yield on a
Question:
The current yield on a 1 year treasury bond is .91% and the current yield on a 2 year treasury bond is 1.36%. What is the expected yield on a 1 year treasury bond, 1 year from today (forward rate)? Use 100 par value in calculation.
Find the spot rate for a theoretical 2 year zero coupon bond using the following par value yield curve. Use 100 par value in calculation.
6 Month T-bill rate (observed) = .50%
1 Year T-bill rate (observed) = .75%
1.5 Year T-note rate (calculated) = 1.10%
2 Year T-note rate (calculated) = 1.65%
The 3 year on the run treasury coupon bond yield is 1.45%. The 5 year on the run treasury coupon bond yield is 2.40%. Using linear extrapolation, What would be the 4 year treasury coupon bond yield on the par yield curve? Use 1000 par value in calculation.
Introduction to Corporate Finance
ISBN: 978-0324657937
2nd edition
Authors: Scott B. Smart, William L Megginson