Question 1- Use the WSJ listing to answer the following questions:
Maturity Ask
Rate Mo/Yr Bid Asked Yield
6.300 April 25 108:07 108:08 -----
4.625 April 17 90:17 90:18 -----
10.55 April 17 138:00 138:01 -----
For these bonds,
a. What is the asked price for each bond?
b. What is the YTM using the asked price?
Question 2- If the following partial listing appeared in the WSJ:
Company Coupon Maturity Last Price Last Yield
AT&T 11.75 April 18, 2028 -------- 8.8
Rouse 9.85 April 18, 2023 -------- 10.5
For each bond:
a. Find the price of the bond.
b. If the AT&T bond could be called in 5 years at a call premium of $1060, what is the yield to call on the bond?
c. Should you compute the YTM or YTC on this bond? Why?
d. Without a computation, if the Rouse bond had a call provision, would that bond be called? Explain briefly.