Present value of a treasury bond and yield to maturity problem
A treasury bond makes semi-annual payments of $300 for 10 years. At the end of 10 years, the bonds principal amount of $10,000 is paid to the investor.
(a) What is the present value of the bond if the annual interest rate is 5%?
(b) Suppose the bond is observed trading at $11,240. What discount rate are investors using to value the bonds cash flows?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/finance/present-value-of-a-treasury-bond-and-yield-to-maturity-problem-jetb