## Time Value of money question

pinalkaria87
Posts: 5
Joined: Thu Oct 04, 2012 11:12 pm

### Time Value of money question

Three different U.S. Treasury notes pay semi-annual coupons and mature in exactly one year; i.e., each pays the next coupon in six months and matures six months subsequently. The price of Bond A with a coupon rate of 2.0% per annum is \$99.02 and the price of Bond C with a coupon rate of 7.0% per annum is \$103.91. If Bond B has a coupon rate of 4.0% per annum, what is the price of Bond B?

Tags:

swarnendupathak
Finance Junkie
Posts: 119
Joined: Mon Sep 17, 2012 11:06 am

### Re: Time Value of money question

Hi,
Calculate the yeild of the bond by trial & error method which would be approx 3.02% & compute the price of the bond B with that. The price of bond B would be nearest to \$ 100.98

Regards
Swarnendu

shreyas
Finance Junkie
Posts: 83
Joined: Thu Jul 19, 2012 6:49 pm

### Re: Time Value of money question

Swarnendu is correct. The yield is to be calculated by trial and error method. But in exam you will be given with option which will be logically correct, thus eliminating the rest three options.