Treasury Securities Yield to Maturity
Not what you're looking for?
All treasury securities has a yield to maturity of 7% so the yield curve is flat. If the yield to maturity on all Treasuries were to decline to 6%, which of the following bonds would have the largest percentage increase in price and why?
a. 15 year zero coupon Treasury bond
b. 12 year Treasury bond with 10% annual coupon
c. 15 year Treasury bond with a 12% annual coupon
d. 2 year zero coupon treasury bond
e. 2 year Treasury bond with a 15& annual coupon
Purchase this Solution
Solution Summary
This solution discusses the impacts of lower yield to maturity on the price of bonds.
Solution Preview
As the YTM decrease, the price of the bonds would increase. However, the increase in price is higher for:
1. Bonds with longer ...
Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Learning Lean
This quiz will help you understand the basic concepts of Lean.