**TREASURY BOND 3.00% 21-03-47 SEMI**
Last traded price = 74.948
Coupon rate = 3%
Current yield = coupon / market price = 4%
Yield to maturity (YTM) = 4.88% *(calculated using ChatGPT)*
RBA benchmark yields 10 years = 4.297% *(source: RBA)*
Face value = $100
This bond is trading at a **discount** evident by the fact that it is selling below its face value (75<100), and also because the current yield is higher than the coupon rate (when prices go down, it pushes current yield above fixed coupon!).
The reason it is trading at a discount is because its coupon rate (3%) is less than that of similar government bonds at 4.297%. Investors aren’t willing to pay full price for it. Because of this, demand for this bond has fallen, lowering its price, until its YTM aligns with similar bonds (RBA benchmark: 4.297% and YTM = 4.88%)
Additionally, the YTM value is greater the the current yield indicating it is at a discount, and it shows investors will have a capital gain at maturity. *(Fernando 2022)*