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30 January, 11:38

Assume that a $1,000,000 par value, semiannual coupon U. S. Treasury note with two years to maturity has a coupon rate of 6%. The yield to maturity (YTM) of the bond is 9.90%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note:

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  1. 30 January, 11:59
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    Value of treasury note = 738000

    Explanation:

    Value of treasury note = Interest * PVAF (9.9%,5Years) + Maturity Value * PVF (9.9%,5year)

    = 30000 * 3.800 + 1000000 * 0.624

    = 738000
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