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 | 103.4638 | 103.5366 | +.3041 | 6.039 |

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
2031. What is your yield to maturity if you buy this bond?
**(Do not round intermediate calculations and enter your
answer as a percent rounded to 2 decimal places, e.g.,
32.16.)**

Yield to maturity %

Answer #1

Face Value = $1,000

Current Price = 104.6435% * $1,000

Current Price = $1,046.435

Annual Coupon Rate = 6.173%

Semiannual Coupon Rate = 3.0865%

Semiannual Coupon = 3.0865% * $1,000

Semiannual Coupon = $30.865

Time to Maturity = 15 years

Semiannual Period = 30

Let Semiannual YTM be i%

$1,046.435 = $30.865 * PVIFA(i%, 30) + $1,000 * PVIF(i%, 30)

Using financial calculator:

N = 30

PV = -1046.435

PMT = 30.865

FV = 1000

I = 2.854%

Semiannual YTM = 2.854%

Annual YTM = 2 * 2.854%

Annual YTM = 5.708% or 5.71%

So, yield to maturity is 5.71%

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
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Rate
Maturity
Mo/Yr
Bid
Asked
Chg
Ask
Yld
??
May
24
103.4586
103.5314
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104.4926
104.6383
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??
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??
??
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Rate
Maturity
Mo/Yr
Bid
Asked
Chg
Ask
Yld
??
May 29
103.5488
103.6370
+.3041
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104.4978
104.6435
+.4317
??
6.173
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??
??
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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
22
103.5410
103.6288
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2.249
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104.4900
104.6357
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??
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Rate
Maturity
Mo/Yr
Bid
Asked
Chg
Ask
Yld
??
May
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103.5475
103.6353
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104.4965
104.6422
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??
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??
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Rate
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Mo/Yr
Bid
Asked
Chg
Ask
Yld
??
May
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104.4874
104.6331
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??
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Rate
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Mo/Yr
Bid
Asked
Chg
Ask
Yld
??
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103.5371
103.6249
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104.4861
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Rate
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Bid
Asked
Chg
Ask
Yld
??
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104.6318
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+.5314
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Bid
Asked
Chg
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??
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103.5553
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104.5043
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