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Use the following Treasury bond quote to answer the following questions ...

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Question

Finance

Use the following Treasury bond quote to answer the following questions

Maturity

Coupon Rate (%)

Bid

Price

Asked

Price

Asked

Yield (%)

8/15/2040

3.875

139.0120

139.0320

1.551

Is the bond selling at discount, par, or premium?

What is the price for an investor who buys the bond?

If Emily is a dealer and owns a bond with $1,000 of par value, what is the market value of her bond?

What is the price for a dealer who buys the bond?

If David is an investor and owns a bond with $10,000 of par value, what is the market value of his bond?

If Alex, who is a dealer, bought and sold bonds with $400,000 of par value, how much would the Alex earn from the spread? Explain your answer.

Explain how you know the Treasury that matures in 2040 is a bond rather than a note.

Answer & Explanation Solved by verified expert
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