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 Virtucon Co.'s bonds. Company Wernham Inc. Swing Inc. ABC Inc. Wayne Inc. Virtucon Co. Coupon Maturity 8.25% 01-01-2026 5.80% 8.98% 9.63% 01-01-2046 01-01-2021 01-01-2026 4.13% 01-01-2021 Which bond is trading at a premium? Wayne Inc. ABC Inc. Last Price $97.87 $99.22 Swing Inc. Wernham Inc. $104.07 $88.14 Last Yield EST Spread UST (Years) EST Volume (1000s) 2.37% 0.58% 2.17% 4.03% 0.86% 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 10 5 10 30 5 59,725 52,930 46,932 45,120 43,960
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 Virtucon Co.'s bonds. Company Wernham Inc. Swing Inc. ABC Inc. Wayne Inc. Virtucon Co. Coupon Maturity 8.25% 01-01-2026 5.80% 8.98% 9.63% 01-01-2046 01-01-2021 01-01-2026 4.13% 01-01-2021 Which bond is trading at a premium? Wayne Inc. ABC Inc. Last Price $97.87 $99.22 Swing Inc. Wernham Inc. $104.07 $88.14 Last Yield EST Spread UST (Years) EST Volume (1000s) 2.37% 0.58% 2.17% 4.03% 0.86% 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 10 5 10 30 5 59,725 52,930 46,932 45,120 43,960
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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 Virtucon Co.'s bonds.
Company
Wernham Inc.
Swing Inc.
ABC Inc.
Wayne Inc.
Virtucon Co.
Coupon Maturity
8.25% 01-01-2026
5.80% 01-01-2021
8.98% 01-01-2026
9.63% 01-01-2046
4.13% 01-01-2021
Which bond is trading at a premium?
O Wayne Inc.
O ABC Inc.
Last Price
$97.87
$99.22
$104.07
$88.14
If you were to calculate the yield on a security with a 10-year US Treasury security, the yield will be equal to
O Swing Inc.
O Wernham Inc.
Last Yield
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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