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 Schubert Inc. Chapman Inc. Rust Inc. Murphy & Co. Pickman Inc. Coupon Maturity Last Price 01-01-2026 8.13% 9.63% 01-01-2046 4.50% 01-01-2021 5.38% 01-01-2021 7.75% 01-01-2026 $82.25 $80.48 $95.18 $101.02 $93.11 Last Yield 11.11% 12.05% 5.62% 5.14% EST Spread UST (Years) 6.20% 10 7.15% 30 1.37% 5 0.89% 5 3.89% 10 EST Volume (1000s) 72,070 65,275 59,277 57,465 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?
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 Schubert Inc. Chapman Inc. Rust Inc. Murphy & Co. Pickman Inc. Coupon Maturity Last Price 01-01-2026 8.13% 9.63% 01-01-2046 4.50% 01-01-2021 5.38% 01-01-2021 7.75% 01-01-2026 $82.25 $80.48 $95.18 $101.02 $93.11 Last Yield 11.11% 12.05% 5.62% 5.14% EST Spread UST (Years) 6.20% 10 7.15% 30 1.37% 5 0.89% 5 3.89% 10 EST Volume (1000s) 72,070 65,275 59,277 57,465 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?
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 9P
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Transcribed Image Text: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
Schubert Inc.
Chapman Inc.
Rust Inc.
Murphy & Co.
Pickman Inc.
O 12.05%
11.65%
12.58%
Coupon Maturity Last Price
8.13%
9.63% 01-01-2046
01-01-2026
01-01-2021
4.50%
5.38%
01-01-2021
7.75% 01-01-2026
10.15%
Which bond is trading at a premium?
Pickman Inc.
O Murphy & Co.
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?
Rust Inc.
$82.25
$80.48
$95.18
$101.02
$93.11
Chapman Inc.
Last Yield
11.11%
12.05%
5.62%
5.14%
EST Spread UST (Years) EST Volume (1000s)
10
72,070
30
65,275
5
59,277
57,465
56,305
6.20%
7.15%
1.37%
0.89%
3.89%
5
10
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