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 198 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
Gracias!

vickyvicksss

  • Member
  • Posts: 351
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

During pregnancy, a woman is more likely to experience bleeding gums and nosebleeds caused by hormonal changes that increase blood flow to the mouth and nose.

Did you know?

Inotropic therapy does not have a role in the treatment of most heart failure patients. These drugs can make patients feel and function better but usually do not lengthen the predicted length of their lives.

Did you know?

Sildenafil (Viagra®) has two actions that may be of consequence in patients with heart disease. It can lower the blood pressure, and it can interact with nitrates. It should never be used in patients who are taking nitrates.

Did you know?

Malaria mortality rates are falling. Increased malaria prevention and control measures have greatly improved these rates. Since 2000, malaria mortality rates have fallen globally by 60% among all age groups, and by 65% among children under age 5.

Did you know?

Disorders that may affect pharmacodynamics include genetic mutations, malnutrition, thyrotoxicosis, myasthenia gravis, Parkinson's disease, and certain forms of insulin-resistant diabetes mellitus.

To examine a child’s ear, the pinna should be pulled back and up for children over 3 years; the pinn To examine a child’s ear, the pinna should be pulled back and up for children over 3 years; the pinn
Peptides and the Peptide Bond Peptides and the Peptide Bond
A peptide bond configurations, trans and cis (rotation around the CCO-N bond) A peptide bond configurations, trans and cis (rotation around the CCO-N bond)
Cutaway Drawing of Tholos, The So-called Treasury of Atreus Cutaway Drawing of Tholos, The So-called Treasury of Atreus
Corbel Vault, Interior of Tholos, The So-called Treasury of Atreus Corbel Vault, Interior of Tholos, The So-called Treasury of Atreus
Heart drawing by 6 years old Heart drawing by 6 years old
Video: Introduction to Tuberculosis

For a complete list of videos, visit our video library