Given the following information, why is one bond’s yield higher than the other’s? Which bond is riskier? Why? Please also indicate whether each bond is traded at par, discount, or premium and explain why. Issuer Name Coupon Maturity Rating Moody's/S&P/ Fitch Yield % GENERAL MOTORS 7.000% Nov 2025 Ba1/BB+/BB+ 6.313 GENERAL MOTORS 8.000% Nov 2031 Ba1/BB+/BB+ 6.838
Given the following information, why is one bond’s yield higher than the other’s? Which bond is riskier? Why? Please also indicate whether each bond is traded at par, discount, or premium and explain why. Issuer Name Coupon Maturity Rating Moody's/S&P/ Fitch Yield % GENERAL MOTORS 7.000% Nov 2025 Ba1/BB+/BB+ 6.313 GENERAL MOTORS 8.000% Nov 2031 Ba1/BB+/BB+ 6.838
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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Given the following information, why is one bond’s yield higher than the other’s? Which bond is riskier? Why? Please also indicate whether each bond is traded at par, discount, or premium and explain why.
|
Issuer Name |
Coupon |
Maturity |
Rating |
Yield % |
|
GENERAL MOTORS |
7.000% |
Nov 2025 |
Ba1/BB+/BB+ |
6.313 |
|
GENERAL MOTORS |
8.000% |
Nov 2031 |
Ba1/BB+/BB+ |
6.838 |
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