Problem: You wish to price a new 2-year Treasury note with face value =$1,000, coupon rate = 4%. You observe the prices of two treasury securities already trading in the market. What would the price of new 2 year Treasury note? (Annual coupon payment)
o 1 year Treasury note with price = $980, coupon rate = 3%, face value = $1,000
o 2 year Treasury note with price = $1002, coupon rate = 4%, face value = $1,000.