Chap008 interest rate and bond evaluation.pptVIP

* * * It is a good exercise to ask students which bonds will have the highest yield-to-maturity (lowest price) all else equal. Debt rated C by Moody’s is typically in default. * * Coupon rate = 8% Matures in November 2025 Bid price is 132 and 23/32 percent of par value. If you want to sell $100,000 par value T-bonds, the dealer is willing to pay 1.3271875(100,000) = $132,718.75 Ask price is 132 and 24/32 percent of par value. If you want to buy $100,000 par value T-bonds, the dealer is willing to sell them for 1.3275(100,000) = $132,750.00 The difference between the bid and ask prices is ca