Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with two years to maturity has a coupon rate of 6%. The
yield to maturity (YTM) of the bond is 9.90%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:
1 answer:
Answer:
Value of treasury note = 738000
Explanation:
Value of treasury note = Interest * PVAF(9.9%,5Years) + Maturity Value * PVF(9.9%,5year)
= 30000 * 3.800 + 1000000 * 0.624
= 738000
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