Determine the yield to maturity

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1. Using the spread above Treasury rates required by investors for the risk of your company defaulting on its senior unsecured obligations (and using data from the website https://www.bloomberg.com/markets/rates-bonds/government-bonds/us ), show at what coupon rate your company could today issue a 10-year senior unsecured straight bond that makes semi-annual payments and sells for its par value/principal amount of $1000 per bond?

2. Show what the value of the bond in b.1 would be if the yield to maturity fell by 1% (due to a decline in yields on 10-year T-bonds and/or a reduction in the company's default risk).

3. Show what the value of the bond in b.1 would be if the yield to maturity rose by 3% (due to a rise in a large rise in 10-year T-bond yields and/or an increase in the company's default risk).

4. Using the spread above Treasury rates required by investors for the risk of your company defaulting on its senior unsecured obligations (and using data from the website https://www.bloomberg.com/markets/rates-bonds/government-bonds/us ), show at what coupon rate your company could today issue a 30-year senior unsecured straight bond that makes semi-annual payments and sells for its par value/principal amount of $1000 per bond?

5. Show what the value of the bond in b.4 would be if the yield to maturity fell by 2% (due to a decline in yields on 30-year T-bonds and/or a reduction in the company's default risk).

Reference no: EM133122946

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