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A Treasury note has 2.5 years left to maturity, a yield to maturity of 3.6 percent, and a coupon rate of 4.40 percent. What is the price of the bond? $1,015.41 O $1,015.53 O $1,016.56 $1,018.96

A Treasury note has 2.5 years left to maturity, a yield to maturity of 3.6 percent, and a coupon rate of 4.40 percent. What is the price of the bond? $1,015.41 O $1,015.53 O $1,016.56 $1,018.96

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 14P: Current Yield with Semiannual Payments A bond that matures in 7 years sells for $1,020. The bond has...
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A Treasury note has 2.5 years left to maturity, a yield to maturity of 3.6 percent, and a coupon rate of 4.40 percent. What is the price of the bond? O $1,015.41 O $1,015.53 O $1,016.56 O $1,018.96
Transcribed Image Text:A Treasury note has 2.5 years left to maturity, a yield to maturity of 3.6 percent, and a coupon rate of 4.40 percent. What is the price of the bond? O $1,015.41 O $1,015.53 O $1,016.56 O $1,018.96
Expert Solution
Step 1

Par value  = $1000

Coupon rate = 4.40%

Semi annual coupon amount = 1000*0.044/2 = $22

Years to maturity = 2.5 Years

Number of coupon payments = 2.5*2= 5

Yield to maturity = 3.6%

Semi annual yield = 3.6%/2 = 1.80%

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