Interpreting Relations among Bond Price, Coupon, Yield, and Credit Rating The following appeared on Yahoo! Finance...

Interpreting Relations among Bond Price, Coupon, Yield, and Credit Rating

The following appeared on Yahoo! Finance (finance.yahoo.com) regarding outstanding bonds issued by Citigroup Inc.

Price Coupon (%) Maturity Yield to Maturity (%) Fitch Ratings

129.87 6.65 2028 3.725 A

114.41 4.950 2043 4.095 A

Questions:

A) Discuss the relation among the coupon, rate, price, and yield for the bond maturing in 2028.

B) Compare the yields on the two books. Why are the yields different when the credit ratings are the same?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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