Consider a holding of $1 million in face value of a 6-yr 4% coupon rate (semiannual payments) US Treasury bond. What is the total number of $1,000 (zero coupon) strip securities that can be formed from this holding? O 1) 1,600 O2) 1,120 3) 1,240 00
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- Let's assume (for simplicity) a typical Treasury coupon bond (10-year maturity, 1.2% coupon rate, $1000 face value) held by SVB was purchase on 2/1/2022 (when the YTM was 1.2%). How much did SVB pay for this Treasury coupon bond at purchase on 2/1/2022Question 3. Refer to the following two money market instruments: Money Market) a 60 day $10,000 CD (add on) quoted at 6% interest, and; a 180 day $10,000 T-bill (discount) quoted at 5.9%. i. ii. (a) Calculate the initial price (P0) and face value (Pf) of the two instruments. (b) Calculate the bond equivalent yield of the two instruments. (c) Which instrument pays a higher bond equivalent yield? (d) In general, the market price of a T-bill is more volatile than a comparable CD in the secondary markets? Explain why this is true.Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with two 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: $859,794.00 $541,670.22 $1,031,752.80 $730,824.90 Based on your calculations and understanding of semiannual coupon bonds, complete the following statements: • Assuming that interest rates remain constant, the T-note’s price is expected to increase or decrease? • The T-note described is selling at a discount, premium or par? .
- Q4) A 10-year U.S. Treasury bond with a face value of $1,000 pays a semiannual coupon of 5.5%. The reported semiannual yield to maturity is 5.2%. What is the present value of the bond?Question 2: What is the YTM (Yield to maturity) for the zero-coupon bond with time to maturity 2 years, and nominal of 1000 EUR that is recently traded at 925 EUR?Assume that a $1,000,000 par value, semiannual coupon U.S. Treasury note with four years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 7.70%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note: $529,701.40 $840,795.88 $714,676.50 $1,008,955.06
- Assuming the bonds are trading at face value. Using the table below, what is the required rate of return on debt? Security Security #1 Security #2 Security #3 Security #4 4.1% 3.9% O 5.9% 3.3% Face Value $5,000,000 $6,000,000 $4,000,000 $5,000,000 Coupon 8% 2% 9% 6% YTM 4.0% 4.5% 3.8% 4.1%e calculate the prices for bonds A-D and the yields for bonds D-G. Coupon Par Value Cash flows: Market price Yield Ꭰ E F G 6.00% 6.70% 5.40% 0.00% 1,000 (757) (813) (799) (505) 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0a. What is the price (expressed as a percentage of the face value) of a 1-year, zero-coupon corporate bond with a AAA rating and a face value of $1,000? b. What is the credit spread on AAA-rated corporate bonds? c. What is the credit spread on B-rated corporate bonds? d. How does the credit spread change with the bond rating? Why? Note: Assume annual compounding.
- A bond that pays interest semiannually has a price of $981.73 and a semiannual coupon payment of $27.75. If the par value is $1,000, what is the current yield?A corporate issue will be brought to the market at aspread of T+ 68bp. Explain what this means andassuminga treasury yield of 1.50% what would be theinitial yield of this bond? Why are Treasuries seen assuitable benchmarks for pricing corporate bonds?Explain what you see from the pricing calculations. How do the two bonds differ? Bond C Bond Price = PV(rate,nper,pmt,fv) Given: n = Period which takes values from 0 to the nth period = 0,1,2,3 & 4 Cn = Coupon payment in the nth period = 10%*$1,000 = $100 YTM = interest rate or required yield = 9.6% P = Par Value of the bond = $1,000 Bond Z Bond Price = PV(rate,nper,pmt,fv) Given: n = Period which takes values from 0 to the nth period = 0,1,2,3 & 4 Cn = Coupon payment in the nth period = 0%*$1,000 = $0.00 YTM = interest rate or required yield = 9.6% P = Par Value of the bond = $1,000 years Bond A Bond Z 4 $1,012.79 $693.04 3 $1,010.02 $759.57 2 $1,006.98 $832.49 1 $1,003.65 $912.41 0 $1,000.00 $1,000.00