Yesterday, you bought a 5-year, zero coupon, $100 face-value Treasury bond with an interest rate (rrf) of 6.0% and a pri

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answerhappygod
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Yesterday, you bought a 5-year, zero coupon, $100 face-value Treasury bond with an interest rate (rrf) of 6.0% and a pri

Post by answerhappygod »

Yesterday, you bought a 5-year, zero coupon, $100 face-value
Treasury bond with an interest rate (rrf) of 6.0% and a
price of $74.73 per bond. rinf was 2.0% at
the time, but jumped to 3.0% overnight. Nothing changed
overnight except for the jump in the inflation rate. How much can
you sell your bond for today? Hint: Assume
rrf = rinf + all other treasury
bond interest rate risks.
Do not round intermediate calculations. Round your final
answer to 2 decimal places.
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