Suppose that you purchased a Ba rated $5.000 annual coupon bond with an 14.3% coupon rate and a 20-year maturity. The current rate on 20-year US treasuries is 3%. If you purchased it at a 11.749 % premium to par value, how much did you pay?

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Q: Ef 332.

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A:

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.