Problem 1
Assume that a $1000 treasury bill is quoted to pay 5% interest over a six-month period.
- How much interest would the investor receive?
- What will be the price of the treasury bill?
- What will be the effective yield?
Problem 2
Given a 15-year bond that sold for $1,000 with a 9% coupon rate, what would be the price of the bond if interest rates in the marketplace on similar bonds are now 12%? Interest is paid semi-annually. Assume a 15 year-time period.
Must show all work and calculations. Work must be legit. I have already performed work and just looking to double check my own calculations. Therefore, if you are not good in finance please do not reply to my work.
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