Calculate treasury note price with asked price method

Assignment Help Finance Basics

Reference no: EM13827767

Problem:

U.S. Treasury quotes from the WSJ on Oct. 15, 1993:

Rate	Maturity	Ask	Change	Ask yield
7.1250	Oct 15, 1995	102.08	-1	5.9156

1. What is the duration of the above Treasury note? Use the asked price to calculate the duration. Recall that Treasuries pay interest semiannually.

a. 3.86 years.
b. 1.70 years.
c. 2.10 years.
d. 1.90 years.
e. 3.40 years.

2. If yields increase by 10 basis points, what is the approximate price change on the $100,000 Treasury note? Use the duration approximation relationship.

a. +$188.69.
b. +$16.05.
c. -$1,605.05.
d. -$16.05.
e. +$160.51.

Additional information:

These short questions is from Finance and the questions are regarding US Treasury notes. The price of the Treasury note is to be computed using asked price. And the change in price of treasury notes with raise in 10 basis points also requires to be computed.

Reference no: EM13827767

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