Question

you have purchased a 2year treasury note. the treasury note has a 4% coupon rate (compounded semi-annually). and the current yield to maturity is 2.75%. what isbthe market price of this 2 year treasury note.

Answer 1

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =2x2

Bond Price =∑ [(4*1000/200)/(1 + 2.75/200)^k]     +   1000/(1 + 2.75/200)^2x2

k=1

Bond Price = 1024.16