Chapter 7 Bonds and Their Valuation 257 TAKIN G A CLOSER LOOK Use online resources to work on this chapter's questions. Please note that website information changes over time, and these changes may limit your ability to answer some of these questions. USING YAH00 FINANCE'S BONDS CENTER TO UNDERSTAND INTEREST RATES AND THEIR IMPACT ON BoND VALUATION In Chapter 6, we looked at the determinants of market interest rates, and in Chapter 7 we looked at how interest rates impact bond valuation. These questions are designed to aid with your understanding of interest rates and their implication for valuing debt securities. Here, we will access the Internet website Yahoo Finance Bonds Center (finance.yahoo.com/bonds) to answer the following questions. 1. Once you've accessed the Yahoo Finance Bonds Center screen, click the "Composite Bond Rates" tab Plot a yield curve for Treasury and corporate bonds. Compare the yield curves today and one month ago. Has the shape of the Treasury yield curve changed meaningfully over the past month? If so, what recent events could possibly explain this shift? 2. Has the spread between corporate and Treasury bonds changed meaningfully over the past month? If 3. In today's market does the spread between corporate and Treasury bonds vary depending on bond 4. Now, click the "Bond Screener" tab. Run a quick screen where you select corporate bonds with a 10-year 5. Click the name of any selected bond. Note the date that the bond was issued, the coupon rate, current so, what factors could possibly explain this shift? maturity? If so, what factors could possibly explain these differences? maturity. Looking at this set of bonds, controlling for other factors, describe briefly how the yields to maturity of the bonds vary according to bond rating and whether the bonds are callable price, and yield to maturity. Based on this information, has the bond's yield to maturity increased, decreased, or stayed the same since the time it was issued? Is the bond selling at a discount, at par, or at a premium? Chapter 7 Bonds and Their Valuation 257 TAKIN G A CLOSER LOOK Use online resources to work on this chapter's questions. Please note that website information changes over time, and these changes may limit your ability to answer some of these questions. USING YAH00 FINANCE'S BONDS CENTER TO UNDERSTAND INTEREST RATES AND THEIR IMPACT ON BoND VALUATION In Chapter 6, we looked at the determinants of market interest rates, and in Chapter 7 we looked at how interest rates impact bond valuation. These questions are designed to aid with your understanding of interest rates and their implication for valuing debt securities. Here, we will access the Internet website Yahoo Finance Bonds Center (finance.yahoo.com/bonds) to answer the following questions. 1. Once you've accessed the Yahoo Finance Bonds Center screen, click the "Composite Bond Rates" tab Plot a yield curve for Treasury and corporate bonds. Compare the yield curves today and one month ago. Has the shape of the Treasury yield curve changed meaningfully over the past month? If so, what recent events could possibly explain this shift? 2. Has the spread between corporate and Treasury bonds changed meaningfully over the past month? If 3. In today's market does the spread between corporate and Treasury bonds vary depending on bond 4. Now, click the "Bond Screener" tab. Run a quick screen where you select corporate bonds with a 10-year 5. Click the name of any selected bond. Note the date that the bond was issued, the coupon rate, current so, what factors could possibly explain this shift? maturity? If so, what factors could possibly explain these differences? maturity. Looking at this set of bonds, controlling for other factors, describe briefly how the yields to maturity of the bonds vary according to bond rating and whether the bonds are callable price, and yield to maturity. Based on this information, has the bond's yield to maturity increased, decreased, or stayed the same since the time it was issued? Is the bond selling at a discount, at par, or at a premium
