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    Price of the Bond and Coupon Interest Payment

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    According to www.bondpage.com on Feb 22, 2006, dealers were offering the US government's 10.625% 2015 Treasury Bond for "145.958." Answer the following questions about the bond:

    a. What is the price in dollars of the bond?

    b. What is the amount of the coupon interest payment you would receive each year if you bought the bond? (assume annual payments)

    c. How many payments would you receive if you bought the bond and held it to maturity? (In other words, how many years does the bond have to go before it matures?)

    d. What is the bond's Yield to Maturity, or YTM, assuming you purchased it for the current offering price?

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    Solution Summary

    This solution defines treasury bond, explains how bonds are sold and make payments during the year, and calculates the yield to maturity of a bond. All steps are shown and references are included.

    $2.19

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