A 1-year T-note, face value $100, paying a coupon rate of 8% p.a., trading at a yield to maturity of 6% p.a. (semi annua

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answerhappygod
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A 1-year T-note, face value $100, paying a coupon rate of 8% p.a., trading at a yield to maturity of 6% p.a. (semi annua

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A 1-year T-note, face value $100, paying a coupon rate of 8%
p.a., trading at a yield to maturity of 6% p.a. (semi annual
compounding).
(a) Explain briefly why relying on this information alone, there
is no way one can figure out the price of a one-year zero coupon
bond with a face value of $100.
(b) In addition to the above information, it is given that a 0.5
year T-note, paying a coupon rate of 4% p.a., is trading at par. •
What is the price of a one-year zero coupon bond with a face value
of $100?
(c) Based on your work in part (b): • What is the price of a
one-year T-note, with a face value of $100, paying a coupon rate of
4% p.a.?
Show the necessary computation.
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