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 Powell Co.’s bonds. Company Coupon Maturity Last Price Last Yield EST Spread UST (Years) EST Volume (1000s) Wernham Inc. 8.25% 01-01-2026 $97.87 8.57% 2.37% 10 59,725 Side Corp. 5.80% 01-01-2021 $99.22 5.98% 0.58% 5 52,930 Widget Corp. 8.98% 01-01-2026 $104.07 8.37% 2.17% 10 46,932 Wayne Inc. 9.63% 01-01-2046 $88.14 10.98% 4.03% 30 45,120 Powell Co. 4.13% 01-01-2021 6.26% 0.86% 5 43,960 If you were to calculate the yield on a security with a 10-year US Treasury security, the yield will be equal to (92.86,90.98,89.17,87.46) . Which bond is trading at a premium? Wayne Inc. Side Corp. Wernham Inc. Widget Corp.
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 Powell Co.’s bonds. Company Coupon Maturity Last Price Last Yield EST Spread UST (Years) EST Volume (1000s) Wernham Inc. 8.25% 01-01-2026 $97.87 8.57% 2.37% 10 59,725 Side Corp. 5.80% 01-01-2021 $99.22 5.98% 0.58% 5 52,930 Widget Corp. 8.98% 01-01-2026 $104.07 8.37% 2.17% 10 46,932 Wayne Inc. 9.63% 01-01-2046 $88.14 10.98% 4.03% 30 45,120 Powell Co. 4.13% 01-01-2021 6.26% 0.86% 5 43,960 If you were to calculate the yield on a security with a 10-year US Treasury security, the yield will be equal to (92.86,90.98,89.17,87.46) . Which bond is trading at a premium? Wayne Inc. Side Corp. Wernham Inc. Widget Corp.
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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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 Powell Co.’s bonds.
|
Company
|
Coupon
|
Maturity
|
Last Price
|
Last Yield
|
EST Spread
|
UST (Years)
|
EST Volume (1000s)
|
|---|---|---|---|---|---|---|---|
| Wernham Inc. | 8.25% | 01-01-2026 | $97.87 | 8.57% | 2.37% | 10 | 59,725 |
| Side Corp. | 5.80% | 01-01-2021 | $99.22 | 5.98% | 0.58% | 5 | 52,930 |
| Widget Corp. | 8.98% | 01-01-2026 | $104.07 | 8.37% | 2.17% | 10 | 46,932 |
| Wayne Inc. | 9.63% | 01-01-2046 | $88.14 | 10.98% | 4.03% | 30 | 45,120 |
| Powell Co. | 4.13% | 01-01-2021 | 6.26% | 0.86% | 5 | 43,960 |
If you were to calculate the yield on a security with a 10-year US Treasury security, the yield will be equal to (92.86,90.98,89.17,87.46) .
Which bond is trading at a premium?
Wayne Inc.
Side Corp.
Wernham Inc.
Widget Corp.
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