1. Copy the quotation of one IBM bond that contains the price “Last Trade Price”

Question

1.     Copy the quotation of one IBM bond that contains the price “Last Trade Price”. Present these quotations in your posting.

2.     Describe the information that you received from the quote of the bond. You have to explain each number and symbol that appears in the bond quotation.

3.     Assume that par value of the bond is $1,000. What was the last price of the bond in $$$ (listed in Last Trade Price)?

4.     Assume that par value of the bond is $1,000. Calculate annual coupon interest payments.

5.     Assume that par value of the bond is $1,000. Calculate current yield of the bond.

6.     Assume that par value of the bond is $1,000. Assume annual coupon payments. Calculate YTM of the bond using the last price (listed in Last Trade Price). (Round the number of years to the whole number). Show your work.

7.     Describe one major shortcoming for YTM and current yield.

8.     How would the following affect the yield on newly issued bond? Please explain your answer.

a)      The bonds are callable.

b)      The bonds are subordinated to the existing bond issue.

c)      The bond rating is better or worse than the Moody’s Aa3 that IBM anticipates.

Explanation / Answer

Issuer name : name of issuer with coupon rate and time to maturity

SYMBOL : Ticker of the issuer

Coupon : Annual interest payment made on par value

MAturity date : Date on which the bond will retire

Last trade price : Price at which it was last traded

Bid price : Current buying price in queue

Bid size : Volume of bonds at bid price

Offer price : Current selling price in queue

Offer size : volume of bonds at offer price

Spread : difference between bid and ask

Issue Type : type of bond : could be government, municipal, corporate

Listed on : exchange on which it is traded

Last bond trade price = 1000*121.15/100 = 1211.5

Annual coupon = coupon/100* par value = 7.625*1000/100 = 76.25

Please ask remaining parts seperately

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.