How much would a 22 year old bond sell for today?
Assume that the Treasury sold a $100,000, 30 year bond exactly twenty two years ago. That bond carried a coupon rate of 10.5%. Also assume that today Treasury security maturing in the five to ten year period yield 2.0%. How much would that 22 year old bond sell for today? (Note: for simplicity purposes only, assume annual interest payments on the bond-though Treasury bonds actually pay interest semi-annually-and assume also that the next interest payment date is exactly one year from now.)