# Implied annual interest rate

Suppose the current Treasury bond futures contract has a quoted price of 89-09. The terms of the contract are standard (20 years, 6% coupon paid semiannually). The implied annual interest rate on the contract is

a. about 6 percent.

b. about 12 percent.

c. about 7.0 percent.

d. about 14 percent.

e. In fact, none of the answers is correct

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The implied rate is the yield to maturity on the bond. The YTM is the discounting rate that will make the present value ...

#### Solution Summary

The solution explains how to calculate the implied annual interest rate

$2.19