3. Exxon Mobil Cor. (rated AAA by S&P) issues an 8-year $1000 par value bond that...

3. Exxon Mobil Cor. (rated AAA by S&P) issues an 8-year $1000 par value bond that pays semi-annual coupons. The coupon rate is 4.5%. The bond is priced at $1116.59.

Find the YTM in EAR.

At the same time(as in question 3), Valero Corp. (rated BBB by S&P) issues a similar bond with the same maturity, par value, and coupon rate. However, the coupon frequency is quarterly. The BBB-AAA spread is 2.5%.
Using the answer in Question 3 and the spread find out the YTM of this bond.

Expert Solution

jeff jeffy answered 1 year ago

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