Mark an analyst, analyzes two corporate bonds callable at par and having the same characteristics in terms of maturity, coupon rates, as well as call dates. Bond Bond #1 Bond #2 Price (per 100 of par value) 102.6 105.2 He estimates the option-adjusted spread (OAS) of the two bonds assuming an interest rate volatility of 20%. 1) Which bond is likely to exhibit a higher OAS? Answer: Bond 1 Bond 2 2) If the volatility of interest rates is 25% instead of 20%, the OAS of Bond #1 is likely to Answer: increase decrease

The following table summarizes the yields to maturity on several one-year, zero-coupon securities: a. What is the price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a AAA rating? b. What is the credit spread on AAA-rated corporate bonds? c. What is the credit spread on B-rated corporate bonds? d. How does the credit spread change with the bond rating? Why?

he following table summarizes yields to maturity on several​ 1-year, zero-coupon​ securities:  ​(Click on the following icon    in order to copy its contents into a​ spreadsheet.)   Security   Yield   Treasury   ​2.860%   AAA corporate   ​3.287%   BBB corporate             ​3.585%   B corporate   ​4.224%     a. What is the price​ (expressed as a percentage of the face​ value) of a​ 1-year, zero-coupon corporate bond with a​ AAA-rating and a face value of ​?   b. What is the credit spread on​ AAA-rated corporate​ bonds?     c. What is the credit spread on​ B-rated corporate​ bonds?   d.  How does the credit spread change with the bond​ rating? Why?   Note​: Assume annual compounding.     Question content area bottom   Part 1   a. What is the price​ (expressed as a percentage of the face​ value) of a​ 1-year, zero-coupon corporate bond with a​ AAA-rating and a face value of ​?   The​ price, expressed as a percentage of the face​ value, is enter your…

1.Identify whether each of the following bonds is trading at a discount, at par value,or at a premium. Calculate the prices of the bonds per 100 in par value. If the couponrate is deficient or excessive compared with the market discount rate, calculate the amount of the deficiency or excess per 100 of par value. Bond Coupon Payment per Period Number of Periods to Maturity Market Discount Rate per period A 2 6 3% B 6 4 4% C 5 5 5% D 0 10 2%

The following table summarizes yields to maturity on several​ 1-year, zero-coupon​ securities:  ​(Click on the following icon in order to copy its contents into a​ spreadsheet.) Security Yield Treasury ​% 2.860% AAA corporate ​% 3.287% BBB corporate ​% 3.585% B corporate ​% 4.224% a. What is the price​ (expressed as a percentage of the face​ value) of a​ 1-year, zero-coupon corporate bond with a​ AAA-rating and a face value of ​? b. What is the credit spread on​ AAA-rated corporate​ bonds?   c. What is the credit spread on​ B-rated corporate​ bonds? d.  How does the credit spread change with the bond​ rating? Why? Note​: Assume annual compounding. Question content area bottom Part 1 a. What is the price​ (expressed as a percentage of the face​ value) of a​ 1-year, zero-coupon corporate bond with a​ AAA-rating and a face value of ​? The​ price, expressed as a percentage of the face​ value, is enter your response here​%. ​(Round to three decimal​ places.)

Assuming that the bond with the coupon you computed in b.1 were issued today, show to what the market price of that bond in b.1 would change if the bond yield to maturity rose by 1% shortly after it was issued at par value (with the change in the yield to maturity occurring after issue due to a rise in yields on 10-year T-bonds and/or a reduction in the company’s default risk). Copuon Rate=4.86%

a. What is the price (expressed as a percentage of the face value) of a one-year, zero-coupon corporate bond with a AAA rating?b. What is the credit spread on AAA-rated corporate bonds?c. What is the credit spread on B-rated corporate bonds?d. How does the credit spread change with the bond rating? Why?   Security                              Yield Treasury                             3.120AAA corporate                  3.874BBB corporate                   4.521B corporate                       5.328

Bond X has a 10% annual coupon, while Bond Y has a 8% annual coupon. Both bonds have the same maturity, a face value of $1,000, an 9% yield to maturity, and are noncallable. Which of the following statements is CORRECT? options: a) Bond X's capital gains yield is greater than Bond Y's capital gains yield. b) Bond X trades at a discount, whereas Bond Y trades at a premium. c) If the yield to maturity for both bonds immediately decreases to 7%, Bond X's bond will have a larger percentage increase in value. d) Bond X's current yield is greater than that of Bond Y. e) If the yield to maturity for both bonds remains at 9%, Bond X's price one year from now will be higher than it is today, but Bond Y's price one year from now will be lower than it is today.

Which of the following observations is the most accurate? 34.A callable bond will have a lower required rate of return than a noncallable bond, assuming all other factors remain stable.b. If all other factors were equal, a company would choose to issue noncallable bonds over callable bonds.c. From the perspective of a traditional investor, reinvestment rate risk is higher than interest rate risk.d. If a 10-year, $1,000 par, zero coupon bond was sold at a price that offered buyers a 10% rate of return, and interest rates fell to the point where kd = YTM = 5%, we might be certain that the bond would sell for more than its $1,000 par value.e. If a 10-year, $1,000 par, zero coupon bond was sold at a price that provided borrowers with a 10% rate of return, and interest rates subsequently fell to the point where kd = YTM = 5%, we might be certain that the bond would sell at a discount below its $1,000 par value.

General Matter’s outstanding bond issue has a coupon rate of 9.2%, and it sells at a yield to maturity of 7.60%. The firm wishes to issue additional bonds to the public. What coupon rate must the new bonds offer in order to sell at face value?