Problem

27. Suppose we have a flat yield curve of 3%. What is the price of a Treasury bond of rema...

27. Suppose we have a flat yield curve of 3%. What is the price of a Treasury bond of remaining maturity seven years that pays a coupon of 4%? (Coupons are paid semiannually.) What is the price of a six-month Treasury bond futures contract? Make any assumption you require concerning the maturity of the delivered bond to find this price.

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Solutions For Problems in Chapter 6