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Finance questions

1. Government Note
Rate: 2.875
Maturity: Nov10n
Bid: 99:02
Asked: 99.03
CHG: -2
ASK YLD: 3.55

A. What annual dollar coupon amount will investors receive if face value of the Treasure note is $1,000?

B. What price would you pay in dollars to purchase this Treasure note?

2. T-bill
Maturity: June 16, 2009
DAYS TO MAT: 41
Bid: 2.68
Asked: 2.67
CHG: 0.01
Asked YLD: 2.72

What price would you pay in dollars to purchase this Treasure bill?

3. Company: Gen Electric
Ticker: GE
Coupon: 7.75
Maturity: 10/19/2010
Last Price: 92.50
Last Yield: 9.797
EST spread: 600
UST: 3
Est $ Vol (000's): 99,590

A. What annual dollar coupon amount will investors receive?

B. What price would you pay in dollars to purchase this bond?

C. What is the estimated yield on Treasury securities?

D. What is the current yield for this bond?

E. What is the yield to maturity on this bond?

4. The Wallace Company has issued a 10-year, $1,000 bond, which pays 12% interest annually. If your required annual rate of return for an investment of this risk is 16%, what is the value of this bond to you? What is the value of the same bond if the interest is paid semi-annually?

Solution Preview

1. Government Note
Rate: 2.875
Maturity: Nov10n
Bid: 99:02
Asked: 99.03
CHG: -2
ASK YLD: 3.55

A. What annual dollar coupon amount will investors receive if face value of the Treasure note is $1,000?

The rate is the coupon rate and that is 2.875%
Annual dollar coupon = 1,000 X 2.875% = $28.75

B. What price would you pay in dollars to purchase this Treasure note?

The bid price is the price at which the dealer will buy the bond and ask price is the price at which the dealer will sell the bond. The values given are percentage of par. If we want to buy the bond, the ask price will be the amount to pay
Amount to pay = 1,000 X 99.03% = $990.30

2. T-bill
Maturity: June 16,2009
DAYS TO MAT:41
Bid: 2.68
Asked: 2.67
CHG: 0.01
Aksed YLD: 2.72

What price would you pay in ...

Solution Summary

The solution explains some finance questions relating to annual dollar coupon amount, purchasing treasury notes, and bond valuation

$2.19