- Risk Premiums In January 2016 Anheuser Busch Issued An Outstanding Bond That Pays A 3 4 Coupon Rate Matures In Januar 1 (55.92 KiB) Viewed 16 times
- Risk Premiums In January 2016 Anheuser Busch Issued An Outstanding Bond That Pays A 3 4 Coupon Rate Matures In Januar 2 (43.52 KiB) Viewed 16 times
- Risk Premiums In January 2016 Anheuser Busch Issued An Outstanding Bond That Pays A 3 4 Coupon Rate Matures In Januar 3 (47.21 KiB) Viewed 16 times
2.92%. In January 2017. Santander Holdings issued an outstanding bond that pays a 3.577% coupon rate, matures in January 2023, and has a yield to maturity of 3.347%. a. Does the Anheuser-Busch bond sell at a premium, at par, or at a discount? How do you know? What about the Santander bond? b. Which bond would you guess has a higher rating? Why? c. Can you draw any conclusion about the shape of the yield curve, either now or when these bonds were first issued, from the information given in the problem? Why or why not? CITE b. Which bond would you guess has a higher rating? Why? (Select the best answer below.). OA. Santander is rated higher. High-quality (high-rated) bonds provide lower returns than lower-quality (low-rated) bonds, reflecting the lender's risk-return tradeoff. OB. Anheuser-Busch is rated higher. High-quality (high-rated) bonds provide lower returns than lower-quality (low-rated) bonds, reflecting the lender's risk-return tradeoff OC. Anheuser-Busch and Santander would be rated the same. Both companies are well-known and would be considered a good investment. OD. Anheuser-Busch is rated higher. High-quality (high-rated) bonds provide higher returns than lower-quality (low-rated) bonds, reflecting the lender's risk-return tradeoff I c. Can you draw any conclusion about the shape of the yield curve, either now or when these bonds were first issued, from the information given in the problem? Why or why not? (Select the best answer below.) OA As noted, the bonds mature at the same time, therefore, the yield curve sloped up when these bonds were issued because the Santander bond has a longer maturity, higher yield, and higher coupon rate than the Anheuser-Busch bond. OB. As noted, the bonds mature at the same time, so comparing their current yields reveals nothing about the shape of the yield curve; the difference in yields is likely traceable to a difference in risk.
2.92%. In January 2017, Santander Holdings issued an outstanding bond that pays a 3.577% coupon rate, matures in January 2023, and has a yield to maturity of Standing bond that pays a 3.4% coupon rate, matures in January 2023, and has a yield to maturity of 3.347%. a. Does the Anheuser-Busch bond sell at a premium, at par, or at a discount? How do you know? What about the Santander bond? b. Which bond would you guess has a higher rating? Why? c. Can you draw any conclusion about the shape of the yield curve, either now or when these bonds were first issued, from the information given in the problem? Why or why not? OB. Anheuser-Busch is rated higher. High-quality (high-rated) bonds provide lower returns than lower-quality (low-rated) bonds, reflecting the lender's risk-return tradeoff C. Anheuser-Busch and Santander would be rated the same. Both companies are well-known and would be considered a good investment. OD. Anheuser-Busch is rated higher. High-quality (high-rated) bonds provide higher returns than lower-quality (low-rated) bonds, reflecting the lender's risk-return tradeoff. c. Can you draw any conclusion about the shape of the yield curve, either now or when these bonds were first issued, from the information given in the problem? Why or why not? (Select the best answer below.) OA. As noted, the bonds mature at the same time, therefore, the yield curve sloped up when these bonds were issued befause the Santander bond has a longer maturity, higher yield, and higher coupon rate than the Anheuser-Busch bond. OB. As noted, the bonds mature at the same time, so comparing their current yields reveals nothing about the shape of the yield curve; the difference in yields is likely traceable to a difference in risk. OC. As noted, the bonds mature at different times, so comparing their current yields reveals nothing about the shape of the yield curve; the difference in yields is likely traceable to a difference in coupon rate. D. As noted, the bonds mature at the same time, therefore, the yield curve sloped down when these bonds were issued because the Santander bond has a shorter maturity, higher yield, and higher coupon rate than the Anheuser-Busch bond.