| Bond valuations and yields: What do they mean, and how do you derive their values? Consider the following case of investment-grade bonds issued by Procter & Gamble Co. (P&G) in August 2011 Proctor & Gamble (NYSE: PG)* Issue Details Issue Size (SMil) $1,000 Couponn 0.700% Maturity Date 08/15/2014 Coupon Type Fixed Callable Yes Coupon Frequency Semiannually Proctor and Gamble's total amount of debt increased from 31.9% in March 2011 to 34.2% in December 2011 mainly due to its net debt issuances to fund general corporate purposes. What was the annual cost of the funds to P&G raised from the $1.0 billion bonds that mature in 2014? basis points Historical Treasury Rates 2 Year Nominal 5 Year Nominal Difference If the bond sold at 100.10 at the time of issue, investors observed that required annual yield would be Looking at the comparable U.S. Treasury yield, these bonds were issued at a spread of 0.79% 1.0 basis points. Because the coupon rate is 0.19% the yield required by the market, the bond sold at at the time of issue