How to read and explain a bond quote?
Go to www.nyse.com Click on Products, and then click on Bonds on the right side of the window. In the window "Issuer name" type IBM. Click Go.
- Copy the quotation of one IBM bond that contains the price “Last Trade Price”. Present these quotations in your posting.
- Describe the information that you received from the quote of the bond. You have to explain each number and symbol that appears in the bond quotation.
- Assume that par value of the bond is $1,000. What was the last price of the bond in $$$ (listed in Last Trade Price)?
- Assume that par value of the bond is $1,000.Calculate annual coupon interest payments.
- Assume that par value of the bond is $1,000.Calculate current yield of the bond.
- Assume that par value of the bond is $1,000. Assume annual coupon payments.Calculate YTM of the bond using the last price (listed in Last Trade Price). (Round the number of years to the whole number). Show your work.
- Describeonemajor shortcoming forYTM and current yield.
- How would the following affect the yield on newly issued bond? Please explain your answer.
a) The bonds are callable.
b) The bonds are subordinated to the existing bond issue.
c) The bond rating is better or worse than the Moody’s Aa3 that IBM anticipates.