What is the present value of the bond?
A 3-year U.S. Treasury bond with a face value of $1,000 pays a coupon of 6.25%. Coupon
is to be paid semi-annually. The reported annual yield to maturity is 6.8%. Solve the
following questions:
a. What is the present value of the bond?
b. What is the duration of the bond?
c. If the yield to maturity changes to 2%, what will be the present value?
d. If the yield to maturity changes to 7%, what will be the present value?
e. If the yield to maturity changes to 16%, what will be the present value?
