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Department of Treasury auctioned a 20-year bond in August. Its coupon rate was 1.125% and similar...

Department of Treasury auctioned a 20-year bond in August. Its coupon rate was 1.125% and similar bonds yield at 1.213%. What should the price be?

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Expert Solution

Answer : Calculation of price of Bond :

Price = [Coupon * [email protected]% for 20 years] + [Face Value * [email protected]% for 20th year]

= [11.25 * 17.6643623666] + [1000 * 0.78573128438]

= 198.724076624 + 785.73128438

= 984.4554 or 984.46

jeff jeffy answered 2 years ago
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