Solved

Suppose a Two-Year Treasury Note Is Trading at Its Par

Question 3

Multiple Choice

Suppose a two-year Treasury note is trading at its par value of $1,000.You examine the cash flows and discover that if you sell them individually in the market,you get $46.23 for the six-month coupon,$44.67 for the one-year coupon,$42.21 for the eighteen-month coupon,$40.22 for the two-year coupon,and $831.56 for the principal.The amount of arbitrage profit you can make by trading each security is:


A) $2.58
B) $4.89
C) $10.34
D) $41.78
E) None of these answers are correct.

Correct Answer:

verifed

Verified

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents