Similar to the method used for pricing corporate bonds and can be done by using TVM equations, a financial calculator, or a spreadsheet program.

____________________________________________

For example, let's assume you are pricing a 7-year, 6% coupon (semi-annual), $100,000 face value Treasury Note, using an expected yield of 8%

Mode: P/Y and C/Y = 2

N = 7*2 = 14

I/Y = 8

PMT = ($100,000 x 0.06)/2 = $3,000

FV = 100,000

PV = ? = -89,436.88 2nd EditionDavid Anderson, Margaret Ray1,044 explanations

8th EditionN. Gregory Mankiw814 explanations

2nd EditionDavid Anderson, Margaret Ray608 explanations

Gary E. Clayton765 explanations