A Treasury bond has a face value of $1,000, an annual coupon, a coupon rate...
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Finance
A Treasury bond has a face value of $1,000, an annual coupon, a coupon rate of 4%, and 2 years to maturity.
A)
What are the bond's cash flows in one year and in two years?
Group of answer choices
$20 in one year, and $1,020 in two years
$40 in one year, and $40 in two years
$40 in one year, and $1,000 in two years
$40 in one year, and $1,040 in two years
B)
What is the price of the bond today (at time 0) if its yield to maturity is 3%?
Group of answer choices
$980.30
$1,000.00
$1,019.13
$1,060.90
C)
Suppose that many investors suddenly decide to buy the bond, and that this pushes its price up today (at time 0). What happens to the bond's yield to maturity?
Group of answer choices
The yield to maturity goes down.
The yield to maturity goes up.
The yield to maturity is unaffected.
It is impossible to determine what happens to the bond's yield to maturity.
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