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MBA 737 InterestRatesWorksheet Hinson Assignment 2-2

MBA 737 InterestRatesWorksheet Hinson Assignment 2-2 -...

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Name ____Jamie Hinson____________________________ Interest Rates and Bond Valuation Worksheet Part I: Go to the Federal Reserve’s Web site to examine historical monthly interest rates on 10-year government bonds at http://www.federalreserve.gov/releases/h15/data/Monthly/H15_TCMNOM_Y10.txt (Historical data on other selected interest rates can be accessed via http://www.federalreserve.gov/releases/h15/data.htm ) and answer the following questions: A. What was the nominal rate on 10-year U.S. Treasury bonds at each of the following dates: 1. At 04/1954: _2.29_______ 2. At 09/1976: _7.59_______ 3. At 09/1981: _15.32_______ 4. For the Latest Month: _2.65_______ B. Assume that a \$1000 U.S. Treasury bond was purchased at par on each of first three dates above. Also assume that for each of the three bonds the reported nominal rate that you found above was the coupon rate at issuance. Assuming semi-annual coupon payments, calculate the value of each bond after 5 years based on the then 5-year nominal rates on U.S. Treasuries available at http://www.federalreserve.gov/releases/h15/data/Monthly/H15_TCMNOM_Y5.txt to determine the gain or loss on each of the three bonds after 5 years?

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