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A)On 15 August 1996, the U.S. Treasury issued a bond maturing on 15 February 2026. The...

A)On 15 August 1996, the U.S. Treasury issued a bond maturing on 15 February 2026. The bond has a coupon rate of 6%, payable semiannually on 15 February and 15 August. If a $100 face value bond is selling for $117.25 on 15 February 2020, compute the bond’s yield to maturity.

B)Compute the above bond’s duration on 15 February 2020.

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Answer #1

(a ): Yield to maturity= 2.85164%

(b ): Duration on 15 February 2020= 5.205323 years

Calculation as below:

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