1. What is the price (PV) of caterpillar bond assuming the bond has 13 years to maturity all else remaining the same?

2. What is the annual coupon payment from the first Treasury bond with par value (FV) of $67 million all else remaining the same.

3. Consider The two bonds Texas Utilities and Coastal Corporation. Both bonds are identical with the same investment grade BBB rating, however, offering different yield. Which one of the bond you are likely to buy and why?

Bloomberg Bonds Full Price S&P Credit Rate Issuer Coupon Maturity YTMPar Amo (million) 2/15/104.55 5.625 5/15/08 4.64 8/15/14.57 6.5 67 92 84 Trea Treas Treas Treasury Sector Time Warner 8.18 Ente Texas Utilities Rockwell International Transamerica 9.3753/1/086.34 98,762 87,192 262,341 93,710 BBB+ 30,678BBB 52,837 A 17,445AA- 30,153 BBB 39,949 A 3,390A+ 8/15/07 5.47 6.375 1/1/08 6.19 1/15/086.04 82 se 30 52 15 30 6.15 6/1/08 6.76 Coastal Co United Airlines 6.5 011 6.831 9/1/08 5.99 38 Burlington 7.34 9/24/08 5.67 Northern Santa Fe News America Holdin Litton Industries 7.375 10/17/08 6.56 30 32,292BBB 10/15/09 6.70 60 66.834 BBB 7.625 2/15/10 7.59 41 41,332BB+ Standard Inc Caterpillar9.3758/15/11 6.01 Inc Corporate Sector Portfolio 60 436,248 698,589 Source: Bloomberg Financial 2d column: coupon rate, coupon payment-coupon rate *par amount Column 3: yield to maturity; interest rate that depends on 6 factors you know Column 4: Far value of bond Column 5: full price or PV of bond Column 6: S & P rating; issuing company credit score; AAA the highest, AA, A, BBB (all of them investment grade), BB B, CCC, CC, C all speculative very risky bonds with very high yield and low price