A 16-year U.S. Treasury bond with a face value of $1,000 pays a coupon of 5.75%....

A 16-year U.S. Treasury bond with a face value of $1,000 pays a coupon of 5.75%. Coupon is to be paid semi-annually. The reported annual yield to maturity is 5.4%. Solve the following questions: a) What is the present value of the bond? b) What is the duration of the bond? c) If the yield to maturity changes to 1%, what will be the present value? d) If the yield to maturity changes to 8%, what will be the present value? e) If the yield to maturity changes to 15%, what will be the present value? ANSWER IN EXCEL FORMAT!!

Solutions

Expert Solution

a) What is the present value of the bond? $1037.18

b) What is the duration of the bond? 10.77 Years

c) If the yield to maturity changes to 1%, what will be the present value? $1700.70

d) If the yield to maturity changes to 8%, what will be the present value? $798.92

e) If the yield to maturity changes to 15%, what will be the present value? $444.28

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jeff jeffy answered 1 year ago

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