A U.S. Treasury bond pays a 5% coupon (annual rate, paid semi-annually) on March 1 and...
A U.S. Treasury bond pays a 5% coupon (annual rate, paid semi-annually) on March 1 and Sept 1. How much interest accrues per $100 of principal between March 1, 2019 and July 9, 2019?
(The distance between March 1 and March 2 is 1 day if you don't count the interest earned on March 2. Similarly, in this problem, ignore the interest earned on July 9. Excel might be helpful in calculating the difference in dates.)
(required precision: 0.01 +/- 0.01)
Homework Answers
Number of days between March 1, 2019 and July 9, 2019 = 130 days
Interest accrued = Principal*Interest rate*Number of days/Total number of days
= 100*5%*130/365
= $1.7808219
i.e. $1.7808
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