Question

You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2016. The bonds have a par value of $1,000.

Rate | Maturity Mo/Yr |
Bid | Asked | Chg | Ask Yld |

?? | May 26 | 103.5488 | 103.6370 | +.3041 | 2.369 |

5.324 | May 31 | 104.4978 | 104.6435 | +.4317 | ?? |

6.173 | May 41 | ?? | ?? | +.5431 | 4.071 |

In the above table, find the Treasury bond that matures in May
2026. What is the coupon rate for this bond? **(Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)**

Answer #1

Par Value = $1,000

Current Price = Asked Quote * Par Value

Current Price = 103.6370% * $1,000

Current Price = $1,036.37

Annual YTM = 2.369%

Semiannual YTM = 2.369% / 2

Semiannual YTM = 1.1845%

Time to Maturity = 10 years

Semiannual Period = 20

Let Semiannual Coupon be $C

$1,036.37 = $C * PVIFA(1.1845%, 20) + $1,000 * PVIF(1.1845%,
20)

$1,036.37 = $C * (1 - (1/1.011845)^20) / 0.011845 + $1,000 /
1.011845^20

$1,036.37 = $C * 17.714699 + $790.169388

$246.200612 = $C * 17.714699

$C = $13.90

Semiannual Coupon = $13.90

Annual Coupon = 2 *$13.90

Annual Coupon = $27.80

Coupon Rate = Annual Coupon / Par Value

Coupon Rate = $27.80 / $1,000

Coupon Rate = 0.0278 or 2.78%

You find the following Treasury bond quotes. To calculate the
number of years until maturity, assume that it is currently May
2016. The bonds have a par value of $1,000.
Rate
Maturity
Mo/Yr
Bid
Asked
Chg
Ask
Yld
??
May 26
103.4638
103.5366
+.3041
6.039
5.324
May 31
104.4978
104.6435
+.4317
??
6.173
May 41
??
??
+.5431
4.071
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Bid
Asked
Chg
Ask
Yld
??
May
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103.4586
103.5314
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Rate
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Mo/Yr
Bid
Asked
Chg
Ask
Yld
??
May 29
103.5488
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number of years until maturity, assume that it is currently May
2016. The bonds have a par value of $1,000.
Rate
Maturity
Mo/Yr
Bid
Asked
Chg
Ask
Yld
??
May
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103.5410
103.6288
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Rate
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Mo/Yr
Bid
Asked
Chg
Ask
Yld
??
May
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Ask
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Rate
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Bid
Asked
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Ask
Yld
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Ask
Yld
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