1 answer

Suppose the Treasury department issues a 10 year T-Note. The T-Note has a face value equal...

Question:

Suppose the Treasury department issues a 10 year T-Note. The T-Note has a face value equal to $1,000.00 and a coupon 2) rate
Suppose the Treasury department issues a 10 year T-Note. The T-Note has a face value equal to $1,000.00 and a coupon 2) rate equal to 3.5%. a) Caleulate the annual coupon payment b) Calculate the total amount of interest the government will have to pay over the life of the T-Note.

Answers

a)

Annual coupon payment = 0.035 x $ 1,000.00

Annual coupon payment = $ 35.00

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b)

The life of the T-note is 10 years

The total interest paid over the life of the T-note = $ 35.00 x 10 years

Total amount of interest paid over the life of the T-note = $ 350.00

.

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