Chrome File Edit View History Bookmarks People Window Help * 11% \" I Thu 7:27 P

Question

Chrome File Edit View History Bookmarks People Window Help * 11% " I Thu 7:27 PM Hassan Alsaihati Q D Assignment Results Hassan c o D ezto.mheducation.com/hm.tpx?todospostSubmissionview :: Apps UWM-, hotmail A ALEKS MathwayPEX Expedia-CR EagleRider Rentals AT&T; > Pay Onlir at ·VIP () DWileyPLUS OjuJ Principles of Finance 350: Fall 2017-001 HASSAN ALSAIHATI FINANCE Assignment 9- GRADED instructions I help Score: 2/6 Points 33.33% Question 7 (of 8) Return To Assignment List Award: 0 out of 1.00 point 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 Maturity Mo/Yr May 23 103.5423 103.6301 Ask Yld 2.269 2? 3.971 Bid Chg +.3261 Rate Asked 2? 6.102 May 28 104.4913 104.6370 .4257 6.148 May 38 +.5366 In the above table, find the Treasury bond that matures in May 2023. 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 n/r % eBook &Resources;

Explanation / Answer

Lets say coupon rate be 2x%

Ask yield=2.269

Asked=103.6301

As May 2023 is 7 years remaining

So, Price=C1/(1+r/2)+C2/(1+r/2)^2+C3/(1+r/2)^3....................C13/(1+r)^13+(C14+FV)/(1+r/2)^14

FV=100

C1=C2=C3=C4=C5=C6=C7=C8=C9=C10=C11=C12=C13=C14=Coupons=100*2x%/2=x

Hence,

103.6301=x/(1+2.269%/2)+x/(1+2.269%/2)^2..................+x/(1+2.269%/2)^13+(100+X)/(1+2.269%/2)^14

Hence, x=1.416394%

So, Coupon rate=2x=2.832789%

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.