Answers - Price
Price - Q1
An investor is offered a 9%, 30 year Treasury Bond which is exactly 10 years old at a 7% yield.
What would he pay for $100,000 of this bond ?
He would pay $121,355
Price of the bond would be the present value of the outstanding coupons plus the present value of the face value.
Price - Q2
An investor purchases $100,000 of an "off-the-run", 9% 30-year Treasury Bond for settlement on 12 Feb 2020.
The bond is due to mature on 1 March 2023.
What would the dirty price of the bond be if it is priced to yield 7% ?
The dirty price would be $109,455
Calculating the price in between coupon dates
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