Explain why the yield-to-maturity on a junk bond is not a particularly good measure of the return you can expect if you buy it and hold it until maturity.
Answer to relevant QuestionsGo to http://stockcharts.com/freecharts/yieldcurve.html and click on the animated yield-curve graph (be sure JAVA is enabled on your browser). Answer the following questions: a. Is the yield curve typically upward sloping, ...A $1,000 par value bond makes annual interest payment of $75. If it offers a yield to maturity of 7.5 %, what is the price of the bond? You have gathered the following data on three bonds: a. If the market's required return on all three bonds is 6%, what are the market prices of the bonds (you can assume annual interest payments). b. The market's required ...Refer back to Figure 4.5. a. What is the yield spread in basis points between the Citigroup bond maturing in May 2015 and the DirectTV bond maturing in March 2015? Does this spread make sense given the different ratings ...Describe the basic structure of secondary markets. Be sure to differentiate between broker markets and dealer markets.
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