Question
In: Finance
A 2%, 3-year US Treasury is selling at 100.25 . The 5% , 3-year IBM is...
A 2%, 3-year US Treasury is selling at 100.25 . The 5% , 3-year IBM is selling at 100.65. Both bonds pay interest semi-annually. The G-spread in basis points on the IBM bond is closest to
|
a. 264 bps. |
||
|
b. 285 bps. |
||
|
c. 300 bps |
||
|
d. 345 bps |
||
|
e. 435 bps |
Solutions
Expert Solution
G-spread = Yield on IBM bond - Yield on US Treasury
G-spread = 5% - 2%
G-spread = 3%
G-spread = 300 bps
Option c is correct
jeff jeffy answered 3 years agoRelated Solutions
A 2%, 3-year US Treasury is selling at 100.25 . The 5% , 3-year IBM is...
A 2%, 3-year US Treasury is selling at 100.25 . The 5% , 3-year
IBM is selling at 100.65. Both bonds pay interest semi-annually.
The G-spread in basis points on the IBM bond is closest to
a. 264 bps.
b. 285 bps.
c. 300 bps
d. 345 bps
e. 435 bps
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Year Large Company US Treasury Bill 1 3.92 5.90 2 14.18 2.53 3 19.37 3.76 4...
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3
19.37
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a.
Calculate the arithmetic average returns for large-company
stocks and T-bills over this period. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.)
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14.47
2.49
3
19.21
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–14.47
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