1 answer

5. How to read the bond market page The following is an excerpt from a bond...

Question:

5. How to read the bond market page

The following is an excerpt from a bond price table. It shows data for bonds issued by three companies: BB&B, BellWest, and Fruitopia. The face value of each bond is $100.

Bonds

Cur Yld

Vol

Close

Net Chg

BB&B 6 1/2 13 6.8 95 9.5 –0.9
BellWest 6 3/4 33 6.4 36 10.5 –0.25
Fruitopia 10 1/2 09 9.7 2 10.8

The price of Fruitopia’s bond is [$95/$108/$111/$105].

[Bellwest's/Frutopia's/BB&B's bond] matures the earliest.

[Bellwest's/Frutopia's/BB&B's bond] was traded least actively.

If BB&B were to issue a bond on the same day this table appeared, with a face value of $100 and a maturity date of 2013, the annual coupon payment would need to be [$6.80/$6.40/$15.11/$9.70].


Answers


Calculate the price of fruitopia bond Price of bond Coupon interest Current yield = $100x10 2 9.7% $10.5 0.097 108.2474 Thus,

.

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