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 Kumatsu Co.'s bonds. Company Vandelay Inc. Initrode Inc. Allied Co. Sombra Corp. Kumatsu 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 If you were to calculate the yield on a security Which bond is trading at a premium? O Initrode Inc. Kumatsu Co. Allied Co. O Sombra Corp. Last Price $97.87 $99.22 $104.07 $88.14 $87.46 $89.17 $92.86 $90.98 Last Yield 8.57% 5.98% 8.37% 10.98% 6.26% EST Spread 2.37% 0.58% 2.17% 4.03% 0.86% UST (Years) EST Volume (1000s) 59,725 52,930 46,932 45,120 43,960 10 5 10 30 5 -year US Treasury security, the yield will be equal to
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 Kumatsu Co.'s bonds. Company Vandelay Inc. Initrode Inc. Allied Co. Sombra Corp. Kumatsu 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 If you were to calculate the yield on a security Which bond is trading at a premium? O Initrode Inc. Kumatsu Co. Allied Co. O Sombra Corp. Last Price $97.87 $99.22 $104.07 $88.14 $87.46 $89.17 $92.86 $90.98 Last Yield 8.57% 5.98% 8.37% 10.98% 6.26% EST Spread 2.37% 0.58% 2.17% 4.03% 0.86% UST (Years) EST Volume (1000s) 59,725 52,930 46,932 45,120 43,960 10 5 10 30 5 -year US Treasury security, the yield will be equal to
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:**Bond List from a Financial Newspaper (January 1, 2016)**
This list provides information about several bonds, including their maturity dates, coupon rates, and various yield metrics. Each bond matures on January 1 of the specified year (5, 10, or 30 years from issuance) and pays a semiannual coupon.
**Column Descriptions:**
- **Company**: The name of the issuer.
- **Coupon**: The annual interest rate paid by the bond.
- **Maturity**: The date when the bond matures.
- **Last Price**: The bond's price at the end of the trading session.
- **Last Yield**: The yield to maturity at the trading day's end.
- **EST Spread**: The yield spread over the relevant U.S. Treasury benchmark.
- **UST (Years)**: The maturity of the U.S. Treasury security used as a benchmark.
- **EST Volume**: Number of bonds traded during the day (in thousands).
**Data Table:**
| 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 |
| Initrode Inc. | 5.80% | 01-01-2021 | $99.22 | 5.98% | 0.58% | 5 | 52,930 |
| Allied Co. | 8.98% | 01-01-2026 | $104.07 | 8.37% | 2.17% | 10 | 46,932 |
| Sombra Corp. | 9.63% | 01-01-2046 | $88.14 | 10.98% | 4.03% | 30 | 45,120 |
| Kumatsu Co. | 4.13% | 01-01-2021 | ______ | 6.26% | 0
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