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You are eyeing an investment in Treasury Notes for a full lot (i.e. PAR=$100,000), and find...

You are eyeing an investment in Treasury Notes for a full lot (i.e. PAR=$100,000), and find a note with a maturity of 5 years. This particular Treasury has a YTM of 1.11%, and a stated rate of interest of 0.96% with a maturity of 5 years. The market price of this treasury is closest to?

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Expert Solution

Price = PV of CFs from it.

Year CF PVF @1.11% Disc CF
1 $         960.00           0.9890 $      949.46
2 $         960.00           0.9782 $      939.04
3 $         960.00           0.9674 $      928.73
4 $         960.00           0.9568 $      918.53
5 $         960.00           0.9463 $      908.45
5 $ 1,00,000.00           0.9463 $ 94,630.13
Price of Bond $99,274.34

jeff jeffy answered 2 days ago
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