Question

• Draw and label (with dollar amounts) the cash flow diagram of a 2-year $10,000 Treasury note (bond). Coupon is 5.0%, and of course you recall from class that interest payments (coupon payments) are twice a year. FOR THE PURPOSES OF THE CF DIAGRAM assume it sells at par (so you would pay $10,000 for it). That’s unrealistic. In real life, you would pay a premium or get a discount on it. (Hint: Don’t over-think this. Arrows in the CF diagram will be for your initial payment, the coupon payments, and the money you get back at maturity.) If you’re e-mailing, a .jpg of a sketch on paper will be fine

Answer 1