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Based on this information, what is Costco's credit spread on 01/2/2021? Though you intend to hold the bond until maturity, you anticipate that there
Based on this information, what is Costco's credit spread on 01/2/2021? Though you intend to hold the bond until maturity, you anticipate that there is a possibility that you will sell the bond after holding it for 3 years and collecting all the coupon payments made until then (including the coupon paid at year 3). You are concerned that yields may rise as the economy recovers. Suppose that when you sell the bond in 3 years, the treasury yields at all maturities will have doubled from their values when you purchase the bond on 01/2/2021. Assume that when you sell the bond, the bond's credit spread is the same as when you purchased it (i.e., your answer to b.). Compute your internal rate of return from selling the bond after 3 years (as an APR). + Date 02/1/2021 The table below lists treasury yields on 01/2/2021 2 YK 0.15% 1 Mo 0.11% 2 Mo 0.12% 3 Mo 0.12% 6 Mo 0.14% 1 YK 0.14% 3 Yr 0.15% 5 Yr 0.32% 7 YK 0.52% 10 K 0.80% 20 Xr 1.35% 30 YK 1.60% O
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