Consider a holding of $1 million in face value of a 6-yr 4% coupon rate (semiannual payments) US Treasury bond. What is the total number of $1,000 (zero coupon) strip securities that can be formed from this holding? O 1) 1,600 O2) 1,120 3) 1,240 00
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- Question 3. Refer to the following two money market instruments: Money Market) a 60 day $10,000 CD (add on) quoted at 6% interest, and; a 180 day $10,000 T-bill (discount) quoted at 5.9%. i. ii. (a) Calculate the initial price (P0) and face value (Pf) of the two instruments. (b) Calculate the bond equivalent yield of the two instruments. (c) Which instrument pays a higher bond equivalent yield? (d) In general, the market price of a T-bill is more volatile than a comparable CD in the secondary markets? Explain why this is true.Let's assume (for simplicity) a typical Treasury coupon bond (10-year maturity, 1.2% coupon rate, $1000 face value) held by SVB was purchase on 2/1/2022 (when the YTM was 1.2%). How much did SVB pay for this Treasury coupon bond at purchase on 2/1/2022Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with two years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note: $859,794.00 $541,670.22 $1,031,752.80 $730,824.90 Based on your calculations and understanding of semiannual coupon bonds, complete the following statements: • Assuming that interest rates remain constant, the T-note’s price is expected to increase or decrease? • The T-note described is selling at a discount, premium or par? .
- Question 2: What is the YTM (Yield to maturity) for the zero-coupon bond with time to maturity 2 years, and nominal of 1000 EUR that is recently traded at 925 EUR?Q4) A 10-year U.S. Treasury bond with a face value of $1,000 pays a semiannual coupon of 5.5%. The reported semiannual yield to maturity is 5.2%. What is the present value of the bond?e calculate the prices for bonds A-D and the yields for bonds D-G. Coupon Par Value Cash flows: Market price Yield Ꭰ E F G 6.00% 6.70% 5.40% 0.00% 1,000 (757) (813) (799) (505) 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0
- Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with four years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 7.70%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note: $529,701.40 $840,795.88 $714,676.50 $1,008,955.06Assuming the bonds are trading at face value. Using the table below, what is the required rate of return on debt? Security Security #1 Security #2 Security #3 Security #4 4.1% 3.9% O 5.9% 3.3% Face Value $5,000,000 $6,000,000 $4,000,000 $5,000,000 Coupon 8% 2% 9% 6% YTM 4.0% 4.5% 3.8% 4.1%a. What is the price (expressed as a percentage of the face value) of a 1-year, zero-coupon corporate bond with a AAA rating and a face value of $1,000? b. What is the credit spread on AAA-rated corporate bonds? c. What is the credit spread on B-rated corporate bonds? d. How does the credit spread change with the bond rating? Why? Note: Assume annual compounding.
- assume that the following data on U.S. Treasury securities is current: Years to maturity Yield to maturity 1 0.800% 2 0.910% 3 1.300% 4 1.350% 5 1.800% 7 2.100% 10 2.800% 20 4.200% According to the term structure, what would you have to pay for a $1000, zero-coupon, Treasury bond that…A bond that pays interest semiannually has a price of $981.73 and a semiannual coupon payment of $27.75. If the par value is $1,000, what is the current yield?A corporate issue will be brought to the market at aspread of T+ 68bp. Explain what this means andassuminga treasury yield of 1.50% what would be theinitial yield of this bond? Why are Treasuries seen assuitable benchmarks for pricing corporate bonds?