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. September 20, 2020, 1:35 pm 9836dcf9d7