A UK government bond has exactly three years to maturity. The bond makes semi-annual coupon payments of £2.50 and has a par value of £100. What is the price of the bond if the semi - annual yield to maturity on the bond is 1.75%? a. £102.50 b. £100.00 c. £95.00 d. £103.00 e. £104.25

A UK government bond has exactly three years to maturity. The bond makes semi-annual coupon payments of £2.50 and has a par value of £100. What is the price of the bond if the semi - annual yield to maturity on the bond is 1.75%? a. £102.50 b. £100.00 c. £95.00 d. £103.00 e. £104.25

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 12P: Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may...

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

a. £102.50

b. £100.00

c. £95.00

d. £103.00

e. £104.25

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