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 Coupon Maturity Last Price Last Yield EST Spread UST (Years) EST Volume (1000s) Vandelay Inc. 8.25% 01-01-2026 $97.87 8.57% 2.37% 10 59,725 Swing Inc. 5.80% 01-01-2021 $99.22 5.98% 0.58% 5 52,930 ABC Inc. 8.98% 01-01-2026 $104.07 8.37% 2.17% 10 46,932 Worth Inc. 9.63% 01-01-2046 $88.14 10.98% 4.03% 30 45,120 Keedsler 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 ______? Which bond is trading at a premium? a. Vandelay Inc. b. Swing Inc. c. ABC Inc.
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 Coupon Maturity Last Price Last Yield EST Spread UST (Years) EST Volume (1000s) Vandelay Inc. 8.25% 01-01-2026 $97.87 8.57% 2.37% 10 59,725 Swing Inc. 5.80% 01-01-2021 $99.22 5.98% 0.58% 5 52,930 ABC Inc. 8.98% 01-01-2026 $104.07 8.37% 2.17% 10 46,932 Worth Inc. 9.63% 01-01-2046 $88.14 10.98% 4.03% 30 45,120 Keedsler 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 ______? Which bond is trading at a premium? a. Vandelay Inc. b. Swing Inc. c. ABC Inc.
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 Keedsler Co.’s bonds.
|
Company
|
Coupon
|
Maturity
|
Last Price
|
Last Yield
|
EST Spread
|
UST (Years)
|
EST Volume (1000s)
|
|---|---|---|---|---|---|---|---|
| Vandelay Inc. | 8.25% | 01-01-2026 | $97.87 | 8.57% | 2.37% | 10 | 59,725 |
| Swing Inc. | 5.80% | 01-01-2021 | $99.22 | 5.98% | 0.58% | 5 | 52,930 |
| ABC Inc. | 8.98% | 01-01-2026 | $104.07 | 8.37% | 2.17% | 10 | 46,932 |
| Worth Inc. | 9.63% | 01-01-2046 | $88.14 | 10.98% | 4.03% | 30 | 45,120 |
| Keedsler 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 ______?
Which bond is trading at a premium?
a. Vandelay Inc.
b. Swing Inc.
c. ABC Inc.
d. Worth Inc.
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