The following bond list is from the business section of a newspaper on January 1, 2016. Notice 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, given 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. Prices are stated relative to a par value of $100. Fill in the nominal YTM for Pickman Inc.’s bonds. (Note: Do not round your intermediate calculations.) Company Coupon Maturity Last Price Last Yield EST Spread UST (Years) EST Volume (1000s) Schubert Inc. 8.13% 01-01-2026 $82.25 11.11% 6.20% 10 72,070 Chapman Inc. 9.63% 01-01-2046 $77.11 12.58% 7.15% 30 65,275 Rust Inc. 4.50% 01-01-2021 $95.18 5.62% 1.37% 5 59,277 Murphy & Co. 5.38% 01-01-2021 $101.02 5.14% 0.89% 5 57,465 Pickman Inc. 7.75% 01-01-2026 $92.36 fill 4.01% 10 56,305 If Chapman Inc. wants to issue new 30-year bonds today, what coupon rate would the bonds have to pay to be issued at par? 12.58% 10.15% 11.65% 12.05% Which bond is trading at a premium? Rust Inc. Murphy & Co. Pickman Inc. Chapman Inc.
The following bond list is from the business section of a newspaper on January 1, 2016. Notice 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, given 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. Prices are stated relative to a par value of $100. Fill in the nominal YTM for Pickman Inc.’s bonds. (Note: Do not round your intermediate calculations.) Company Coupon Maturity Last Price Last Yield EST Spread UST (Years) EST Volume (1000s) Schubert Inc. 8.13% 01-01-2026 $82.25 11.11% 6.20% 10 72,070 Chapman Inc. 9.63% 01-01-2046 $77.11 12.58% 7.15% 30 65,275 Rust Inc. 4.50% 01-01-2021 $95.18 5.62% 1.37% 5 59,277 Murphy & Co. 5.38% 01-01-2021 $101.02 5.14% 0.89% 5 57,465 Pickman Inc. 7.75% 01-01-2026 $92.36 fill 4.01% 10 56,305 If Chapman Inc. wants to issue new 30-year bonds today, what coupon rate would the bonds have to pay to be issued at par? 12.58% 10.15% 11.65% 12.05% Which bond is trading at a premium? Rust Inc. Murphy & Co. Pickman Inc. Chapman 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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The following bond list is from the business section of a newspaper on January 1, 2016. Notice 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, given 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. Prices are stated relative to a par value of $100.
Fill in the nominal YTM for Pickman Inc.’s bonds. (Note: Do not round your intermediate calculations.)
|
Company
|
Coupon
|
Maturity
|
Last Price
|
Last Yield
|
EST Spread
|
UST (Years)
|
EST Volume (1000s)
|
|---|---|---|---|---|---|---|---|
| Schubert Inc. | 8.13% | 01-01-2026 | $82.25 | 11.11% | 6.20% | 10 | 72,070 |
| Chapman Inc. | 9.63% | 01-01-2046 | $77.11 | 12.58% | 7.15% | 30 | 65,275 |
| Rust Inc. | 4.50% | 01-01-2021 | $95.18 | 5.62% | 1.37% | 5 | 59,277 |
| Murphy & Co. | 5.38% | 01-01-2021 | $101.02 | 5.14% | 0.89% | 5 | 57,465 |
| Pickman Inc. | 7.75% | 01-01-2026 | $92.36 | fill | 4.01% | 10 | 56,305 |
If Chapman Inc. wants to issue new 30-year bonds today, what coupon rate would the bonds have to pay to be issued at par?
12.58%
10.15%
11.65%
12.05%
Which bond is trading at a premium?
Rust Inc.
Murphy & Co.
Pickman Inc.
Chapman Inc.
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