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You are a US. Treasury bond dealer who trades a 4.75%, 3year, semi-annual coupon bond. Your...

You are a US. Treasury bond dealer who trades a 4.75%, 3year, semi-annual coupon bond. Your required YTM is 0.92826126%. How should you quote your asked price in percentage of par value?

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Answer #1

Face/Par Value of US. Treasury bond= $1000

Semi-Annual Coupon Bond = $1000*4.75%*1/2

= $23.75

No of coupon Payments(n) = No of years to maturity*2 = 3 years*2 = 6

Semi-annual YTM = 0.92826126%/2 = 0.46413063%

Calculating the Market price of Bond:-

Price = $140.214 + $972.599

Price = $1112.81

So,the current market price of these bonds is $1112.81

- Quoted Ask price in percentage of par value = Current price/Par Value = $1112.81/$1000

= 111.281%

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