4. A Treasury bond has a maturity of Oct 31, 2025. The coupon is 8% paid semi-annually. The yield (YTM) is 6.5%. You purchased the bond with a settlement date of April 20, 2017. The face value is $1,000,000.
a. Calculate the accrued interest.
b. To calculate the dirty price, you need the clean or quoted price. Given the information about the bond, how do you propose to calculate the clean price? [Hint: Consider how you would discount the cash flows.]
4. A Treasury bond has a maturity of Oct 31, 2025. The coupon is 8% paid semi-annually. The yield (YTM) is 6.5%. You purchased the bond with a settlement date of April 20, 2017. The face value is $1,000,000.
a. Calculate the accrued interest.
b. To calculate the dirty price, you need the clean or quoted price. Given the information about the bond, how do you propose to calculate the clean price? [Hint: Consider how you would discount the cash flows.]
Related questions
Assume interest rates for bonds today is 5% for an AAA rated bond. Calculate the price of the bond you have selected relative to the 5%. Is the bond selling at a premium or a discount? Why? Be sure to show how you arrived at your answer. What other factors may influence the value of a bond?
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