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 The Blue Co.'s bonds. Company Stay Corp. Northern Inc. Acme Corp. Ashpool Inc. The Blue Co. Coupon Maturity 8.25% 01-01-2026 5.80% 01-01-2021 8.98% 01-01-2026 01-01-2046 9.63% 4.13% 01-01-2021 $90.98 Which bond is trading at a premium? O Ashpool Inc. O Stay Corp. The Blue Co. Last Price Acme Corp. $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 2.17% Last Yield 8.57% 5.98% 8.37% 10.98% 6.26% EST Spread UST (Years) EST Volume (1000s) 2.37% 10 0.58% 5 2.17% 10 4.03% 30 0.86% 5 59,725 52,930 46,932 45,120 43,960
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 The Blue Co.'s bonds. Company Stay Corp. Northern Inc. Acme Corp. Ashpool Inc. The Blue Co. Coupon Maturity 8.25% 01-01-2026 5.80% 01-01-2021 8.98% 01-01-2026 01-01-2046 9.63% 4.13% 01-01-2021 $90.98 Which bond is trading at a premium? O Ashpool Inc. O Stay Corp. The Blue Co. Last Price Acme Corp. $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 2.17% Last Yield 8.57% 5.98% 8.37% 10.98% 6.26% EST Spread UST (Years) EST Volume (1000s) 2.37% 10 0.58% 5 2.17% 10 4.03% 30 0.86% 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:The image presents a bond list from the business section of a financial newspaper dated January 1, 2016. The bonds mature on January 1 of either 5, 10, or 30 years. Each bond displays a semiannual coupon rate as noted in the "Coupon" column.
The "Last Price" and "Last Yield" columns show each bond's price and yield to maturity (YTM) at the end of trading. The "EST Spread" column indicates the bond’s spread over the relevant US Treasury benchmark, given as a percentage. "UST" indicates which US Treasury security maturity is used as the benchmark for each bond. "EST Volume" shows the number of bonds traded during the day, with prices relative to a $100 par value. All bonds share the same default premium.
**Table Details:**
| Company | Coupon | Maturity | Last Price | Last Yield | EST Spread | UST (Years) | EST Volume (1000s) |
|--------------|--------|------------|------------|------------|------------|-------------|-------------------|
| Stay Corp. | 8.25% | 01-01-2026 | $97.87 | 8.57% | 2.37% | 10 | 59,725 |
| Northern Inc.| 5.80% | 01-01-2021 | $99.22 | 5.98% | 0.58% | 5 | 52,930 |
| Acme Corp. | 8.98% | 01-01-2026 | $104.07 | 8.37% | 2.17% | 10 | 46,932 |
| Ashpool Inc. | 9.63% | 01-01-2046 | $88.14 | 10.98% | 4.03% | 30 | 45,120 |
| The Blue Co. | 4.13% | 01-01-2021 | $90.98 | 6.26% | 0.86% | 5 | 43,960 |
**Additional Information:**
- If one calculates the yield on a security with a 10-year US Treasury security, it equates to
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