Suppose the U.S. Treasury issued $500 million face value of 10 year, 7.5% bonds on January 15, 2005 at par value. Coupon interest is paid semi-annually with the face value due in 10 years (1/15/2015).On January 14, 2006, this bond is priced in the market to yield a stated 8%, using semiannual compounding. Calculate the correct price you will pay for the bond on 1/15/2006, for each $100 of face value.If, on the other hand, the stated yield-to-maturity of these bonds is 7%, what is their price (per $100 face value)? Suppose the U.S. Treasury issues $1,000 million face value, 7.5%, 30-year bonds on January 15, 2006. Coupon interest is paid semi-annually with the face value payable in 30 years (1/15/2036). If these bonds are priced in the market at 94 on the issue date (i.e. $94 purchase price for each $100 of face value on 1/15/2006), what is the stated yield to maturity?If the price is 101, what is the stated yield to maturity?What is the general relationship among price, coupon, yield and par value?

Treasury bonds are issued by the federal bank and they are quite safe and secured and considered as…

Answered: pose the U.S. Treasury issued $500…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 15P

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Suppose the U.S. Treasury issued $500 million face value of 10 year, 7.5% bonds on January 15, 2005 at par value. Coupon interest is paid semi-annually with the face value due in 10 years (1/15/2015).

On January 14, 2006, this bond is priced in the market to yield a stated 8%, using semiannual compounding. Calculate the correct price you will pay for the bond on 1/15/2006, for each $100 of face value.
If, on the other hand, the stated yield-to-maturity of these bonds is 7%, what is their price (per $100 face value)?

Suppose the U.S. Treasury issues $1,000 million face value, 7.5%, 30-year bonds on January 15, 2006. Coupon interest is paid semi-annually with the face value payable in 30 years (1/15/2036).

If these bonds are priced in the market at 94 on the issue date (i.e. $94 purchase price for each $100 of face value on 1/15/2006), what is the stated yield to maturity?
If the price is 101, what is the stated yield to maturity?
What is the general relationship among price, coupon, yield and par value?

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I am having difficulty recreating the formula below using the price function on excel

Using EXCEL function PRICE

PRICE=PRICE(DATE(2006,01,15),DATE(2015,01,15),7.5%,8%,100,2)

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