calculate the value of the Treasury note:

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 23P
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7. Valuing semiannual coupon bonds

Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and number of periods, the valuation model is adjusted accordingly.
Assume that a $1,000,000 par value, semiannual coupon US Treasury note with four years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:
 
a. $746,617.36
 
b. $895,940.83
 
c. $470,368.94
 
d. $634,624.76
 
 
Based on your calculations and understanding of semiannual coupon bonds, complete the following statement:
The T-note described in this problem is selling at a_________?
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