Homework Answers
Answer is $97.66
Par Value of T-Note = $100
Annual Coupon Rate = 2.00%
Semiannual Coupon Rate = 1.00%
Semiannual Coupon = 1.00% * $100
Semiannual Coupon = $1.00
Time to Maturity = 5 years
Semiannual Period = 10
Annual YTM = 2.50%
Semiannual YTM = 1.25%
Market Price = $1.00 * PVIFA(1.25%, 10) + $100 * PVIF(1.25%,
10)
Market Price = $1.00 * (1 - (1/1.0125)^10) / 0.0125 + $100 /
1.0125^10
Market Price = $97.66
So, the market price of this 5-year T-Note is $97.66
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