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 22 | 103.5410 | 103.6288 | +.3248 | 2.249 |

6.052 | May 27 | 104.4900 | 104.6357 | +.4245 | ?? |

6.143 | May 37 | ?? | ?? | +.5353 | 3.951 |

In the above table, find the Treasury bond that matures in May
2022. What is the coupon rate for this bond? **(Do not round
intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.)**

Coupon rate %

Answer #1

Treasury bond that matures in May 2022 is the first bond.

Here we need to find the coupon rate of the bond. The price of the bond is:

Dollar price = 103.6288% × $1,000

Dollar price = $1,036.288

So the bond price equation is:

P = $1,036.288 = C (PVIFA 1.1245%,12 ) + $1,000(PVIF 1.1245%,12 )

Solving for the coupon payment, we get:

1036.288 = C(11.17) + 874.43

C = 161.861/11.17

C = $14.49

Since this is the semiannual payment, the annual coupon payment is:

2 × $14.49 = $28.99

And the coupon rate is the coupon rate divided by par value, so:

Coupon rate = $28.99 / $1,000

Coupon rate = **.02899or 2.90%**

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
24
103.4586
103.5314
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5.959
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104.4926
104.6383
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Rate
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Bid
Asked
Chg
Ask
Yld
??
May
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103.5475
103.6353
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Bid
Asked
Chg
Ask
Yld
??
May
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103.5488
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Rate
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Mo/Yr
Bid
Asked
Chg
Ask
Yld
??
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103.5371
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104.4861
104.6318
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Bid
Asked
Chg
Ask
Yld
??
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Bid
Asked
Chg
Ask
Yld
??
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Bid
Asked
Chg
Ask
Yld
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Rate
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Bid
Asked
Chg
Ask
Yld
??
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Rate
Maturity
Bid
Asked
Chg
Ask Yld
??
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