Business, 13.04.2021 02:40 TunaBoi

Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the number of periods doubles, whereas the amount of cash flow decreases by half. Using the values of cash flows and the number of periods, the valuation model is adjusted accordingly. Assume that a $1,000,000 par value, semiannual coupon U. S. Treasury note with five years to maturity (YTM) has a coupon rate of 3%. The yield to maturity of the bond is 7.70%.
Using this information and ignoring the other involved, calculate the value of the Treasury note:
a) $509,016.47
b) $686,768.25
c) $969,555.18
d) $807,962.65.
Based on your calculations and understanding of semiannual coupon bonds, complete the following statement:
Assuming that interest rates remain constant, the T-note's price is expected to:.

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Bonds often pay a coupon twice a year. For the valuation of bonds that make semiannual payments, the...

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