Question

You are eyeing an investment in Treasury Notes for a full lot (i.e. PAR=$100,000), and find a note with a maturity of 100 years. This particular Treasury has a YTM of 3.41%, and a stated rate of interest of 2.52% with a maturity of 100 years. The market price of this treasury is closest to?

a. $146,175.14

b. $39,155.26

c. $74,813.11

d. $74,787.81

Answer 1

Annual Payment = 0.0252(100,000) = $2,520

Calculating Price,

Using TVM Calculation,

PV = [FV = 100,000, PMT = 2,520, N = 100, I = 0.0341]

PV = $74,813.11

So,

Price = $74,813.11

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