Question

You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2022. All of the bonds have a par value of $1,000 and pay semiannual coupons.

Rate: Maturity Month/Year: Bid: Asked: Change: Ask Yield:

?? May 36 103.4599 103.5327 +.3287 5.979

6.202 May 39 104.4939 104.6396 +.428 ?? ??

6.158 May 45 ?? ?? +.5392 4.01


In the above table, find the Treasury bond that matures in May 2039. What is your yield to maturity if you buy this bond?


Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Answer 1

The Treasury bond that matures in May 2039 has a yield to maturity of 0.52%.

Step-by-step explanation:

To find the Treasury bond that matures in May 2039, we need to locate the row in the table that corresponds to this maturity date. According to the given table, the bond that matures in May 2039 has a bid price of 104.4939 and an asked price of 104.6396. The yield to maturity can be calculated using the formula:

Yield to Maturity = (Future Value - Present Value)/Present Value

Substituting the values, we get Yield to Maturity = (1040 - 1034.939)/1034.939 = 0.0052 or 0.52%