You find the following Treasury bond quotes. To calculate the number of years un

Question

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. Rate Maturity Mo/Yr Bid Asked Chg Ask Yld ?? May 26 103.4612 103.5340 +.3015 5.999 6.252 May 31 104.4952 104.6409 +.4293 ?? 6.163 May 41 ?? ?? +.5405 4.031 In the above table, find the Treasury bond that matures in May 2031. What is your yield to maturity if you buy this bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Yield to maturity %

Explanation / Answer

We will calculate Yield of Bonds that are maturing in May 31.

PV = 1046.409

N = 15 years

Number of Semi Annual Periods = 15 * 2 = 30

FV = 1,000

Coupon Rate = 6.252

Semi Annual Coupon Rate = 6.252/2 = 3.126%

Semi Annual Coupon Payment = 31.26

r = 2.892503

YTM = 2 * 2.892503

YTM = 5.79%

Rate Maturity (Mo/ Yr) Bid Asked Change Ask Yield May 26 103.4612 103.5340 +.3015 5.999 6.252 May 31 104.4952 104.6409 +.4293 6.163 May 41 +.5405 4.031

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

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