Question

Treasury notes and bonds. Use the information in the following table: Assume a $100,000 par value. What is the yield to maturity of the August 2003 Treasury bond with semiannual payment? Compare the yield to maturity and the current yield. How do you explain this relationship? What is the yield to maturity of the August 2003 Treasury bond? % (Round to three decimal places.) í Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) Today is February 15, 2008 Price (per Issue $100 par Date value) Bond Aug 2003 97.26 Type Coupon Rate Maturity Date YTM Current Yield Rating / 5.00% 8-15-2013 - 5.141% | AAA Print Done

Answer 1

Function Arguments ? X RATE Nper Pmt 11 5000/2 -97260 100000 o 1 1 1 1 = 11 = 2500 = -97260 = 100000 FV Type = 0.027927429 Returns the interest rate per period of a loan or an investment. For example, use 6%/4 for quarterly payments at 6% APR. Type is a logical value: payment at the beginning of the period = 1; payment at the end of the period = 0 or omitted. Formula result = 2.79% Help on this function D OK Cancel

Hence, Yield to maturity is 5.58% (2.79%*2)

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