treasury prices and yields are quoted in newspapers and online. To get practice
ID: 2394294 • Letter: T
Question
treasury prices and yields are quoted in newspapers and online. To get practice reading and understanding these quotes, locate the Treasury issue in Figure 7.4( The image above) maturing in August 2029. Assume a par value of $10,000 and answer the following questions.
What is its coupon rate? (Enter your answer as a percent rounded to 3 decimal places, e.g., 32.161.)
What is the quoted price (in dollars) that you would receive for selling this bond? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
What was the previous day’s quoted price (in dollars) to purchase the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)
treasury prices and yields are quoted in newspapers and online. To get practice reading and understanding these quotes, locate the Treasury issue in Figure 7.4( The image above) maturing in August 2029. Assume a par value of $10,000 and answer the following questions.
Treasury Notes and Bonds Chg Maturity 8/31/2017 5/15/2018 2/28/2019 2/29/2020 a/15/2021 11/15/2022 8/15/2023 2/15/2024 2/15/2026 8/15/2026 2/15/2027 8/15/2027 8/15/2028 11/15/2028 2/15/2029 a/15/2029 5/15/2030 2/15/2031 2/15/2036 2/15/2037 2/15/2038 2/15/2039 8/15/2039 2/15/2040 2/15/2041 8/15/2041 2/15/2042 5/15/2042 2/15/2043 2/15/2044 Coupon 1.875 3.875 1.375 1.250 8.125 1.625 2.500 2.750 6.000 6.750 6.625 6.375 5.500 5.250 5.250 6.125 6.250 5.375 4.500 4.750 4.375 3.500 4.500 4.625 4.750 3.750 3.125 3.000 3.125 3.625 Bid 102.8828 110.3125 98.6953 95.7734 140.1328 92.1563 98.0703 99.6094 130.2813 138.7500 137.9219 135.6875 126.2891 123.3828 123.3594 134.5156 136.8359 125.8984 114.7578 118.7813 112.6016 97.7422 114.7656 116.9609 119.2969 101.3047 89.8516 87.4688 89.2969 98.2031 Asked 102.9141 110.3750 98.7109 95.8203 140.1797 92.2031 98.1328 99.6719 130.3594 138.8281 138.0000 135.7656 126.3672 123.4609 123.4375 134.5938 136.9141 125.9766 114.8359 118.8594 112.6797 97.8203 114.8438 116.9922 119.3438 101.3828 89.8672 87.4844 89.3594 98.2656 -0.1563 -0.3125 -0.3516 -0.3750 -0.5234 -0.4063 -0.4453 -0.4844 -0.6875 -0.7266 -0.7422 -0.7422 -0.7422 -0.7031 -0.7031 -0.7500 -0.7813 -0.7266 -0.7266 -0.7422 -0.7031 -0.5938 -0.6953 -0.6875 -0.7344 -0.6875 -0.5938 -0.6016 -0.6094 -0.6797 Asked Yield 1.019 1.317 1.646 1.996 2.231 2.635 2.726 2.788 2.962 2.989 3.048 3.100 3.204 3.230 3.256 3.256 3.289 3.352 3.523 3.542 3.582 3.634 3.604 3.610 3.620 3.670 3.711 3.720 3.729 3.721Explanation / Answer
1) The coupon rate, located in the second column of the quote is 6.125%
2)
The bid price is:Bid price = 134.5156% × $10,000
Bid price = $13,451.56
3)
The previous day’s ask price is found by:
Previous day’s asked price = Today’s asked price – Change
Previous day’s asked price = 134.5938 – 0.7500
Previous day’s asked price = 133.8438
The previous day’s price in dollars was:
Previous day’s dollar price = (133.8438 / 100) × $10,000
Previous day’s dollar price = $13,384.38
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