question archive Suppose that 10 years ago you purchased at par a 30-year Treasury bond with a face value of $100 and a 5% annual coupon
Suppose that 10 years ago you purchased at par a 30-year Treasury bond with a face value of $100 and a 5% annual coupon
Subject:FinancePrice: Bought3
Suppose that 10 years ago you purchased at par a 30-year Treasury
bond with a face value of $100 and a 5% annual coupon. When you bought the bond, you intended to hold it for 10 years and then sell it.
a) At the time you bought the bond, you expected a 3% IRR on your 10-year investment. How much did you expect to sell the bond for?
b) When you sold the bond after 10 years, it's actual yield to maturity was 7% (EAR). What price did you sell the bond for?
