Question

a. A Treasury issue is quoted at 103.88545 bid and 103.935 ask. Assume a face value...

a. A Treasury issue is quoted at 103.88545 bid and 103.935 ask. Assume a face value of $1,000. What is the least you could pay to acquire a bond?

Price

b. A Treasury bond with the longest maturity (30 years) has an ask price quoted at 104.4375. The coupon rate is 3.60 percent, paid semiannually. What is the yield to maturity of this bond?

yield to maturity: %

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Answer #1
a. The least price we have to pay to acquire a bond is ask rate price that is $ 103.935.
b. Yiled to maturity = {C + (F-P)/n} / {(F+P)/2}
C = Coupan/Interest payment
F = Face Value
P= Price
n = No. of periods
Assuming Face value = $1,000
C = 1,000 X 3.6%
36
Yiled to maturity = {C + (F-P)/n} / {(F+P)/2}
Yiled to maturity = {36+ (1000-104.4375)/60} / {(1000+104.4375)/2}
0.0922
or
Yield to Maturity 9.22%
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