Suppose US government issues a treasury bond at Jan 15 2005 with a face value...
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Accounting
Suppose US government issues a treasury bond at Jan 15 2005 with a face value of $100, and
the bond matures at Jan 15 2015. The bond pays semi-annual coupons, with a coupon rate of
7.5%.
a. If the market interest rate at Jan 15 2005 is 8%. What is the bond price?
b. Now one year later, you are at Jan 15 2006. After two coupon payments, and the market
interest rate changes to 7%. If you want to sell this bond to another investor. What is the
price at Jan 15 2006?
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