10. Bond listings and yield spreads The following bond list is from the business section of a financial newspaper on January 1, 2016. Assume that each bond shown matures on January 1 in 5, 10, or 30 years. Each bond shown pays a semiannual coupon and the coupon rate is in the column labeled Coupon. The Last Price and Last Yield columns indicate each bond's price and YTM at the end of trading. EST Spread indicates the bond's spread above the relevant US Treasury benchmark, expressed as a percentage. UST indicates which US Treasury security maturity is the relevant benchmark for each bond. EST Volume shows the number of bonds traded during the day. Notice also that prices are stated relative to a par value of $100. Assume all bonds have the same default premium. Fill in the value of Keedsler Co.'s bonds. Coupon Maturity Company Vandelay Inc. 8.25% 01-01-2026 Northern Inc. 5.80% 01-01-2021 Widget Corp. 8.98% 01-01-2026 Worth Inc. 9.63% 01-01-2046 Keedsler Co. 4.13% 01-01-2021 $90.98 Which bond is trading at a premium? O Keedsler Co. O Worth Inc. Last Price $97.87 $99.22 $104.07 $88.14 Widget Corp. O Northern Inc. Last Yield 8.57% 5.98% 8.37% 10.98% 6.26% If you were to calculate the yield on a security with a 10-year US Treasury security, the yield will be equal to 6.20% EST Spread UST (Years) EST Volume (1000s) 2.37% 10 59,725 0.58% 5 52,930 2.17% 10 4.03% 30 0.86% 5 46,932 45,120 43,960

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Chapter1: Investments: Background And Issues
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10. Bond listings and yield spreads
The following bond list is from the business section of a financial newspaper on January 1, 2016. Assume that each bond shown matures on January 1
in 5, 10, or 30 years. Each bond shown pays a semiannual coupon and the coupon rate is in the column labeled Coupon.
The Last Price and Last Yield columns indicate each bond's price and YTM at the end of trading. EST Spread indicates the bond's spread above the
relevant US Treasury benchmark, expressed as a percentage. UST indicates which US Treasury security maturity is the relevant benchmark for each
bond. EST Volume shows the number of bonds traded during the day. Notice also that prices are stated relative to a par value of $100. Assume all
bonds have the same default premium.
Fill in the value of Keedsler Co.'s bonds.
Company
Vandelay Inc.
Northern Inc.
Widget Corp.
Worth Inc.
Keedsler Co.
Coupon
8.25%
5.80%
Maturity
01-01-2026
01-01-2021
8.98% 01-01-2026
01-01-2046
9.63%
4.13% 01-01-2021
Which bond is trading at a premium?
O Keedsler Co.
O Worth Inc.
Last Price
Widget Corp.
O Northern Inc.
$97.87
$99.22
$104.07
$88.14
$90.98▼
Last Yield
If you were to calculate the yield on a security with a 10-year US Treasury security, the yield will be equal to 6.20% ▼
8.57%
5.98%
8.37%
10.98%
6.26%
EST Spread UST (Years) EST Volume (1000s)
2.37%
10
59,725
0.58%
5
52,930
2.17%
10
46,932
4.03%
30
45,120
0.86%
5
43,960
Transcribed Image Text:10. Bond listings and yield spreads The following bond list is from the business section of a financial newspaper on January 1, 2016. Assume that each bond shown matures on January 1 in 5, 10, or 30 years. Each bond shown pays a semiannual coupon and the coupon rate is in the column labeled Coupon. The Last Price and Last Yield columns indicate each bond's price and YTM at the end of trading. EST Spread indicates the bond's spread above the relevant US Treasury benchmark, expressed as a percentage. UST indicates which US Treasury security maturity is the relevant benchmark for each bond. EST Volume shows the number of bonds traded during the day. Notice also that prices are stated relative to a par value of $100. Assume all bonds have the same default premium. Fill in the value of Keedsler Co.'s bonds. Company Vandelay Inc. Northern Inc. Widget Corp. Worth Inc. Keedsler Co. Coupon 8.25% 5.80% Maturity 01-01-2026 01-01-2021 8.98% 01-01-2026 01-01-2046 9.63% 4.13% 01-01-2021 Which bond is trading at a premium? O Keedsler Co. O Worth Inc. Last Price Widget Corp. O Northern Inc. $97.87 $99.22 $104.07 $88.14 $90.98▼ Last Yield If you were to calculate the yield on a security with a 10-year US Treasury security, the yield will be equal to 6.20% ▼ 8.57% 5.98% 8.37% 10.98% 6.26% EST Spread UST (Years) EST Volume (1000s) 2.37% 10 59,725 0.58% 5 52,930 2.17% 10 46,932 4.03% 30 45,120 0.86% 5 43,960
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