Use the various pieces of information provided below to answer the questions that follow: I . On
Question:
Use the various pieces of information provided below to answer the questions that follow:
I. On March 6, 2012, the U.S. Treasury reported the following yields on Treasury securities of different maturities.
Maturity | Yield |
3-month | 0.46% |
6-month | 0.86% |
1-year | 1.28% |
2-year | 1.85% |
5-year | 2.10% |
10-year | 2.15% |
30-year | 2.49% |
Based on the above information,
a. Describe the shape of the Treasury yield curve on March 6, 2012. Explain your answer.
b. Calculate the 5-year, 10-year, and 30-year maturity risk premiums. show calculations.
Use the various pieces of information provided below to answer the questions that follow:
I. On March 15, 2022, the U.S. Treasury reported the following yields on Treasury securities of different maturities.
Maturity | Yield |
3-month | 0.46% |
6-month | 0.86% |
1-year | 1.28% |
2-year | 1.85% |
5-year | 2.10% |
10-year | 2.15% |
30-year | 2.49% |
II. On March 15, 2022, Charter Communications LLC issued a 5.25% coupon bond maturing on 4/1/2053 and a 5.50% coupon bond maturing in 4/1/2063. The bonds are rated BBB- by Standard & Poor's.
III. On March 15, 2021, AT&T had issued a 3.5% coupon bond maturing on 9/15/2053. The bond is rated BBB by Standard & Poor's.
a. Based on the information provided, calculate the best estimate of the default risk premium on the 5.25% Charter Communications LLC bond maturing in 2053. Be sure to show your calculation. [1 point]
b. What explains why the two bonds issued by Charter Communications LLC have different coupon rates? [1 point]
c. What factors explain the difference in coupon rates between the 5.25% Charter Communications LLC bond and and the 3.5% AT&T bond, both of which mature in 2053? [3 points]
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill