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GrogVix [38]
9 months ago
11

Suppose a u. S. Treasury bond will pay $4,475 five years from now. If the going interest rate on 5-year treasury bonds is 4. 25%

, how much is the bond worth today?.
Business
1 answer:
umka21 [38]9 months ago
5 0

The calculated worth of the given U.S. Treasury bond today is  mathematically given as $3634.23.

<h3>What does a Treasury bond do?</h3>

Treasury bonds (sometimes known as T-bonds) are fixed-rate debt instruments issued by the US government, with maturities ranging from 10 to 30 years. T-bonds offer semi-annual interest payments up until maturity, when the owner is given the bond's face value.

<h3>Do Treasury Bonds pay interest monthly?</h3>

Interest on my savings bonds is paid monthly. The bond's interest rate is applied to a fresh principal amount every six months because interest is compounded semi-annually. The total of the former principal and the interest accrued over the preceding six months makes up the new principal.

<h3>Briefing:</h3>

The present worth of the U.S. Treasury bond is given by:

Future value/(1 + interest rate)(no. of years)

4.475/(1 + 4.25)⁵
2.500/(1.0425)⁵

3634.23

Present worth is  =$3634.23

To know more about Treasury bond visit:

brainly.com/question/1246006

#SPJ4

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Which function(s) of money informs the consumer what currency to use to obtain a good or service?
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Letter B is correct.<u> Method of authotity.</u>

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2 years ago
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annua
CaHeK987 [17]

Answer:

The current price of the bond would be € 898.87

Explanation:

Hi, we need to bring to present value the coupon payments and also the face value of the coupon in order to find the price of this bond, that can be done by using the following formula.

Price=\frac{Coupon((1+Yield)^{n}-1) }{Yield(1+Yield)^{n} } +\frac{FaceValue}{(1+Yield)^{n} }

Where:

Coupon = 1,000*0.078=78

Yield = 0.089 (or 8.9%)

Face Value= 1,000

n = 20 coupon payments

So, everything should look like this.

Price=\frac{78((1+0.089)^{20}-1) }{0.089(1+0.089)^{20} } +\frac{1,000}{(1+0.089)^{20} }

Price=717.13+181.74=898.87

Therefore, the price of this bond is € 898.87

Best of luck.

7 0
2 years ago
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