Consider the following price chart for Boston Scientific’s 4.00% bond. The bond was issued at par in February 2018 and matures in March 2028. The following screen shot is from Markets Insider (August 9, 2019) and tracks the bond’s daily price since issuance.

a. At what approximate price is the bond trading on August 9, 2019?

b. In late 2018, the bond was significantly below par. Explain how this could have happened.

c. Consider the price movement during 2019. What is the relation of the bond’s price to its yield during this period?

d. Suggest three reasons for Boston Scientific’s bond price to increase so significantly during the first half of 2019.
 

Transcribed Image Text:

110% 108% 106% 104% 102% 100% 98% 96% 94% 2/26/2018 5/7/2018 7/16/2018 9/24/2018 12/3/2018 2/11/2019 4/22/2019 7/1/2019 110% 108% 106% 104% 102% 100% 98% 96% 94% 2/26/2018 5/7/2018 7/16/2018 9/24/2018 12/3/2018 2/11/2019 4/22/2019 7/1/2019

Answer rating: 100% (QA)

Answer Explanation Suppose price of Bond is Rs 100 Face value Now if it grwing at 1 e... View the full answer