Homework Answers
Treasury notes gets matured within 1 to 10 year of time frame.
New face value of bond at 4% inflation rate= 1000*1.04=$1040 and new coupon payment=1040*10%=$104
More the maturity of a bond, the greater is it's interest rate risk.
In the given list, Issue 3 has highest maturity and hence highest interest rate risk and Issue 4 has the least maturity and has the least interest rate risk.
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