Question

In: Finance

Google just sold a $10 million face value of 3.75% US Treasury Notes that mature on...

Google just sold a $10 million face value of 3.75% US Treasury Notes that mature on May 15, 2030, and has a yield to maturity of 4.5%.

What is the flat price of the bond today (4/6/2020)?

What is the invoice price of the bond?

Expert Solution

Flat price of bond is calculated using PRICE function in Excel.

Settlement = settlement date = date today

Maturity = maturity date

rate = coupon rate

yld = yield to maturity

redemption = redemption value (% of par)

frequency = coupons per year. This is 2, since bonds usually pay coupons semiannually.

By inputting the values into this function, we get the bond price per $100 of par value.

As the par value of this bond is $10,000,000, we multiply the answer by 100,000 ($10,000,000 / $100)

Flat price of the bond is $9,395,869.47

Invoice price = flat price + accrued interest

accrued interest = face value * coupon rate * (number of days since last coupon payment / 360)

The last coupon payment was on November 15, 2019. Number of days since last coupon payment = 142 days

accrued interest = $10,000,000 * 3.75% * (142 / 360)

accrued interest = $147,916.67

Invoice price = flat price + accrued interest

Invoice price = $9,395,869.47 + $147,916.67

Invoice price = $9,543,786.14

jeff jeffy answered 1 year ago

BOB just sold $4 million face value of 4.75% US Treasury Notes that mature on May...

BOB just sold $4 million face value of 4.75% US Treasury Notes that mature on May 15, 2030, and has a yield to maturity of 5%. SHOW YOUR WORK STEP BY STEP FOR CREDIT! a. What is the flat price of the bond today (4/1/2020)? b. What is the invoice price of the bond?

The Garcia Company’s bonds have a face value of $1,000, will mature in 10 years, and...

The Garcia Company’s bonds have a face value of $1,000, will mature in 10 years, and carry a coupon rate of 19.0 percent. Assume interest payments are made semiannually. a. Determine the present value of the bond’s cash flows if the required rate of return is 19.0 percent. (Round factor value calculations to 5 decimal places, e.g. 0.52755. Round other intermediate calculations to 2 decimal places, e.g. 52.75. Round final answer to nearest dollar amount.) !!!!!ANSWER IS $1,000!!!! b. How...

~In Excel~~ Question 1. A US-Treasury bond with face value of $1,000 pays interest at an...

~~~In Excel~~~~ Question 1. A US-Treasury bond with face value of $1,000 pays interest at an annual rate of 5%. Coupons are paid twice per year. a. If this bond has 4 years to mature, what is the price of the bond if current yield to maturity is 4%? Calculate this by finding the value of coupons and principal separately. (12) b. If the coupon were instead paid once per year, what would be the price of the bond? ~~~In...

On April 1, 1989, Saxe, Inc. purchased $200,000 face value, 9% U.S. Treasury Notes for $198,500,...

On April 1, 1989, Saxe, Inc. purchased $200,000 face value, 9% U.S. Treasury Notes for $198,500, including accrued interest of $4,500. The notes mature July 1, 1990, and pay interest semiannually on January 1 and July 1. Saxe uses the straight-line method of amortization. The notes were sold on December 1, 1989 for $206,500, including accrued interest of $7,500. In its October 31, 1989 balance sheet, the carrying amount of this investment should be

Problem 1 : Suppose you buy a 3-year US Treasury bond with a face value of...

Problem 1 : Suppose you buy a 3-year US Treasury bond with a face value of $1,000. It pays three annual coupons at a rate of 2.50% exactly 1, 2, and 3 years from the day you purchase it. (a) Assume that when you purchase the bond, its yield to maturity equals 3%. What is its value on the day of purchase? (b) Is this bond issued at par, a discount, or premium? (c) Next assume the moment after you...

9. a. You’re considering buying a 10 year US Treasury 7% coupon bond with a face...

9. a. You’re considering buying a 10 year US Treasury 7% coupon bond with a face value of $1000. The bond pays coupons semi-annually. The next coupon will be paid in 6 months. The bond is currently selling for $977.12. Using Excel’s IRR command, determine the YTM of the bond. Express your answer as an effective annual rate (EAR). (Not at an APR). Report your answer as a decimal, not as a percent, using at least 4 significant digits....

The bonds for Gladstone Limited will mature in 10 years, with a face value of $1000, and semi-annual coupons.

Question 1The bonds for Gladstone Limited will mature in 10 years, with a face value of $1000, and semi-annual coupons. The coupon rate on these bonds is 7.5% per year.Question 1(a)The risk associated with Gladstone Limited bonds has increased dramatically, as investors now want a 12% return to hold the bonds. At what price should the bonds trade today? Question 1(b)Today, Gladstone Limited admitted to having some management problems with seven (7) years to go before maturity. The price...

Treasury bonds with a face value of 1 million won, maturity of 3 years, interest rate...

Treasury bonds with a face value of 1 million won, maturity of 3 years, interest rate of 5%, interest payment once a year, discount rate of 6%. 1. How many years is the Macaulay Duration of the above bonds? 2. How many years is the modified duet of the above bond? 3. If the rate of interest is 10% (one-time annual payment), face value is 10,000 won, the present price of the bond is 9,600 won, and the price...

Suppose a 10-year zero coupon Treasury bond with a face value of $10, 000 sells for $6,000.

Suppose a 10-year zero coupon Treasury bond with a face value of $10, 000 sells for $6,000. a. Find the bond value. b. Suppose the price of the above bond rose to Kshs 7,500, find the new yield. c. Explain what happens when interest rates increase.

We observe the following US Treasury Bonds with semi-annual coupon payments, each with a face value...

We observe the following US Treasury Bonds with semi-annual coupon payments, each with a face value of $10000. A bond maturing in 6 months, with a 3% coupon rate, is trading for $10099.25 A bond maturing in 12 months, with a 5% coupon rate, currently costs $ 10293.75 A bond maturing in 18 months, with a 5% coupon rate, costs $10231.25 A bond maturing in 24 months, with a 4% coupon rate, costs $10071.00 (a) Use these bonds to and...