List the cash flows for bond

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Suppose the U.S. Treasury issued 2 year, 2.5% bonds on October 15, 2019. The face value is paid at maturity (10/15/2021).

a) List the cash flows for this bond for $100 million of face value starting from the day of issue (ignore the purchase price for this question).

b) Suppose it is now April 15, 2020 and you want to buy this bond for investment. What is the maximum price that you would be willing to pay, if you want to achieve a yield to maturity of 3.1% (assume the settlement date is 4/15/2020). Would you buy it if the quoted price is 98-16?

c) If someone purchased these bonds on April 14, 2021 (settlement date: 4/15/2021) at $99-02, what would the yield to maturity be?

Reference no: EM132460212

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