Question

A 10-year, $1,000 par T-note with a coupon rate of 2.6% (semi-annual payments) has 8 years left to maturity and a current yield of 1.92%. What is the T-note's value?

Answer 1

Face/Par Value of T-Note= $1000

Semi-annual Annual Coupon Payment = $1000*2.6%*1/2

= $13

No of years to maturity(n) = 8 years*2 = 16

Semi-annual YTM(or Current yield) = 1.92%/2 = 0.96%

Calculating the Market price of Bond:-

Price = $191.962 + $858.243

Price = $1050.39

So,the current the T-note's value is $1050.39