Question: The following bond quotations are taken from the Wall Street Journal dated Friday, September 5, 2003.
|
Company
|
Coupon
|
Maturity
|
Last Price
|
Yield
|
|
International Paper
|
6.75
|
Sep. 1, 2011
|
108.198
|
5.468
|
|
Sara Lee
|
3.875
|
15-Jun-13
|
89.700
|
5.235
|
|
Wells Fargo
|
7.25
|
24-Aug-05
|
109.645
|
2.191
|
|
General Motors
|
7.125
|
15-Jul-13
|
101.201
|
6.952
|
|
Lincoln National
|
7.125
|
Dec. 15, 2011
|
105.903
|
5.307
|
[A] Describe why the International Paper bond is selling at a premium but Sara Lee is selling at a discount
[B] Why is the yield [yield to maturity] on the General Motors bond so much higher than the yield on the Sara Lee bond?