This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Consider a Sears zero coupon bond and a US Treasury zero coupon bond both maturing in ten years. The ... (Read 177 times)

anjilletteb

  • Hero Member
  • *****
  • Posts: 569
on: Apr 25, 2021
Consider a Sears zero coupon bond and a US Treasury zero coupon bond both maturing in ten years. The current yield to maturity on the Sears bond is 5.3% compared to the Gov't bond yield of 4.5%. The higher yield on the Sears bond reflects Sears's higher probability of default. Historically, the difference between the yields of the two bonds has been 1.2%. This difference is called the "yield spread." Today the yield spread is only 0.8%. You expect that the yield spread will widen back to its historic value over the next few days. Assume that both yields will change equally to bring the spread back to its historic position and assume that the mid-point of the spread will stay where it is. What are the anticipated price changes for the two bonds?
◦ Sears - $11.21, Gov't + $12.45
◦ Sears + $11.21, Gov't - $12.45
◦ Sears + $11.21, Gov't + $12.45
◦ Sears - $11.21, Gov't - $12.45
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by anjilletteb on Apr 25, 2021

jgranad15

  • Sr. Member
  • ****
  • Posts: 345
Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 35% of students answer this correctly


anjilletteb

  • Member
  • Posts: 569
Reply 2 on: Apr 25, 2021
Great answer, keep it coming :)

bblaney

  • Member
  • Posts: 323
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

Barbituric acid, the base material of barbiturates, was first synthesized in 1863 by Adolph von Bayer. His company later went on to synthesize aspirin for the first time, and Bayer aspirin is still a popular brand today.

Did you know?

Not getting enough sleep can greatly weaken the immune system. Lack of sleep makes you more likely to catch a cold, or more difficult to fight off an infection.

Did you know?

Russia has the highest death rate from cardiovascular disease followed by the Ukraine, Romania, Hungary, and Poland.

Did you know?

When Gabriel Fahrenheit invented the first mercury thermometer, he called "zero degrees" the lowest temperature he was able to attain with a mixture of ice and salt. For the upper point of his scale, he used 96°, which he measured as normal human body temperature (we know it to be 98.6° today because of more accurate thermometers).

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Ngandong calottes from Java are the youngest H. erectus fossils at perhaps 27,000-50,000 years old. Ngandong calottes from Java are the youngest H. erectus fossils at perhaps 27,000-50,000 years old.
The 2012 U.S. presidential campaign rang with “get tough” cries to end Iran’s nuclear capacity and c The 2012 U.S. presidential campaign rang with “get tough” cries to end Iran’s nuclear capacity and c
Poverty rates have declined in the last 50 years, and the biggest decline has been for people 65 and ... Poverty rates have declined in the last 50 years, and the biggest decline has been for people 65 and ...
Life Cycle Nutrition: Toddlers through the Later Years Life Cycle Nutrition: Toddlers through the Later Years
Beak size in finches during dry years increases because of strong selection Beak size in finches during dry years increases because of strong selection
Heart drawing by 6 years old Heart drawing by 6 years old
Video: How does asthma work?And How do you treat asthma?

For a complete list of videos, visit our video library