Isuer Name IBM CORP 4.0% 06/20/42

Symbol IBM42

Coupon 4.0000%

Maturity Date 06/20/2042

Last Trade Price 93.3600

Last Trade Time 09/24/2015 12:19:26

Change $ 18.3000

Bid Price 98.2000

Bid Size 24

Offer Price 104.4200

Offer Size 5

Spread 62.2000

Volume Issue Type Corporate Bonds

Traded on NYSE

1. Assumethatparvalueofthebondis$1,000.Whatwasthelastpriceofthebondin$$$(listedinLastTradePrice)?

2. Assume that par value of the bond is $1,000. Calculate annual coupon interest payments.

3. Assume that par value of the bond is $1,000. Calculate current yield of the bond.

4. Assume that par value of the bond is $1,000. Assume annual coupon payments. Calculate YTM of the bond using the last price (listed in Last Trade Price). (Round the number of years to the whole number). Show your work.

5. Describe one major shortcoming for YTM and current yield.

6. How would the following affect the yield on newly issued bond? Please explain your answer.

a) The bonds are callable.

b) The bonds are subordinated to the existing bond issue.

c) The bond rating is better or worse than the Moodys Aa3 that IBM anticipates.