5.Calulate the spread to treasuries on a 10 year corporate bond with a coupon ra

Question

5.Calulate the spread to treasuries on a 10 year corporate bond with a coupon rate of 8% using the following yields:
2 year treasury: 3.0%
10 year treasury: 4.0%
10 year municipal: 3.5%
30 year treasury: 5.5%
Federal funds rate: 4.25%
A) 3.5%
B) 2.75%
C) 4.0%
D) 1.5%
E) 3.0%

16. ABC company has a 10% bond that has a face value of $1000 and matures in 20 years. Assume that coupon payments are made semi-annually. The bonds can be called after 5 years at a premium of 5% over face value. What is the value of the bond if rates drop immediately to 8%?
A) $764
B) $1,115
C) $1085
D) $1,000
E) $1,092

22.Calculate the value of a 25 year bond with a coupon rate of 9% compounded semi-annually and a face value of $1,000. Assume the market rate is 8%.
A) $1,107
B) $1,078
C) $1,000
D) $571
E) $1,122

Explanation / Answer

5)c 6)B 22)A

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