Question

5. 2.35 points You find the following Treasury bond Quotes. To calculate the number of years until maturity assume that it is currently May 2016. The bonds have a par value of $1,000 I 6.252 12 Moly . MB 31 May 41 Bid TA 1044952 27 Asked HẾT LÀ 104 5409 27 Cho 1 4293 5 40S | ? 4001 In the above table, find the Treasury bond that matures in May 2041. What is the asked to this bond in dotas? De not round intermediate calculations and round your answer to 2 decimal places, ... 32.16.) Akce If the bid ask spread for this one is 0654. What is the bid price in dollars ? (Do not culations and round your answer to 2 decimal places... 32.16)

Answer 1

a). To find the Asked Price, we need to put the following values in the financial calculator:

N = 2041 - 2016 = 25;

I/Y = 4.031;

PMT = 6.143%*1000 = 61.43;

FV = 1000;

Press CPT, then PV, which gives us -1,328.86

So, Asked Price = $1,328.86

b). Bid Price = Asked Price - Bid-Ask Spread = $1,328.86 - $0.0654 = $1,328.79