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jlana
Dec 13, 2008, 09:04 PM
The following bond quotations are taken from the Wall Street Journal dated
Friday, September 5, 2003:
Company Coupon Maturity Last Price Yield
International Paper (IP) 6.750 Sep 01, 2011 108.198 5.468
Sara Lee (SLE) 3.875 Jun 15, 2013 89.700 5.235
Wells Fargo (WFC) 7.250 Aug 24, 2005 109.645 2.191
General Motors (GM) 7.125 Jul 15, 2013 101.201 6.952
Lincoln National (LNC) 6.200 Dec 15, 2011 105.903 5.307
a. Explain why the International Paper bond is selling at a premium but the
Sara Lee is selling at a discount.
b. Why is the yield (yield to maturity) on the General Motors bond so much
Higher than the yield on the Sara Lee bond?
c. Why is the yield (yield to maturity) on the Wells Fargo Bank bond so much
Less than the yield on the Lincoln National Corp. bond?

Clough
Dec 14, 2008, 12:45 AM
The following bond quotations are taken from the Wall Street Journal dated
Friday, September 5, 2003:
Company Coupon Maturity Last Price Yield
International Paper (IP) 6.750 Sep 01, 2011 108.198 5.468
Sara Lee (SLE) 3.875 Jun 15, 2013 89.700 5.235
Wells Fargo (WFC) 7.250 Aug 24, 2005 109.645 2.191
General Motors (GM) 7.125 Jul 15, 2013 101.201 6.952
Lincoln National (LNC) 6.200 Dec 15, 2011 105.903 5.307
a. Explain why the International Paper bond is selling at a premium but the
Sara Lee is selling at a discount.
b. Why is the yield (yield to maturity) on the General Motors bond so much
higher than the yield on the Sara Lee bond?
c. Why is the yield (yield to maturity) on the Wells Fargo Bank bond so much
less than the yield on the Lincoln National Corp. bond?

Hi, jlana!

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Thanks!