The average yield on AA+ 30-year T-bond is 5%. The average yield on 10-year AA corporate bonds is 4.5%. What is the yield spread between AA+ T-bonds and AA corporate bonds? LO1 and LO4

The average yield on AA+ 30-year T-bond is 5%. The average yield on 10-year AA corporate bonds is 4.5%. What is the yield spread between AA+ T-bonds and AA corporate bonds? LO1 and LO4

4.5%

0.5%

1.0%

1.5%

An investor purchased a 30-year 4.3% Treasury bond at the issue price of 96.12 on June 1, 2019. As the COVID-19 pandemic unfolded, investors fled to investments perceived as safe and purchased large quantities of Treasury securities. The increased demand pushed Treasury prices up. On June 1, 2020, exactly one year after buying the T-bond, the investor sold it for 121.35 after receiving two-coupon payments. What was the yield to maturity when the investor purchased the bond? What was the investors realized return, stated as an APR, when she sold the bond? LO2

An investor purchased a 30-year 4.3% Treasury bond at the issue price of 96.12 on June 1, 2019. As the COVID-19 pandemic unfolded, investors fled to investments perceived as safe and purchased large quantities of Treasury securities. The increased demand pushed Treasury prices up. On June 1, 2020, exactly one year after buying the T-bond, the investor sold it for 121.35 after receiving two-coupon payments. What was the yield to maturity when the investor purchased the bond? What was the investors realized return, stated as an APR, when she sold the bond? LO2

The yield to maturity at purchase is 9.51%, while the rate of return at sale is 43.91%.

The yield to maturity at purchase is 4.30%, while the rate of return at sale is 8.60%.

The yield to maturity at purchase is 5.49%, while the rate of return at sale is 36.59%.

The yield to maturity at purchase is 4.54%, while the rate of return at sale is 28.95%.

An investor purchased a 20-year 3% Treasury note at the issue price of 106.20 on June 1, 2021. As the government response to COVID-19 pandemic continued, investors became worried about the U.S. governments ability to service its growing debt burden and sold large quantities of Treasury securities. The decreased demand pushed Treasury prices down. On June 1, 2022, exactly one year after buying the T-note, the investor sold it for 88.53 after receiving two-coupon payments. What was the yield to maturity when the investor purchased the note? What was the investors realized return, stated as an APR, when she sold the note? LO2

An investor purchased a 20-year 3% Treasury note at the issue price of 106.20 on June 1, 2021. As the government response to COVID-19 pandemic continued, investors became worried about the U.S. governments ability to service its growing debt burden and sold large quantities of Treasury securities. The decreased demand pushed Treasury prices down. On June 1, 2022, exactly one year after buying the T-note, the investor sold it for 88.53 after receiving two-coupon payments. What was the yield to maturity when the investor purchased the note? What was the investors realized return, stated as an APR, when she sold the note? LO2

The yield to maturity at purchase is 2.3%, while the rate of return at sale is 18.6%.

The yield to maturity at purchase is 2.60%, while the rate of return at sale is 14.44%.

The yield to maturity at purchase is 3.30%, while the rate of return at sale is 16.03%.

The yield to maturity at purchase is 5.11%, while the rate of return at sale is 13.91%.