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The current U.S. treasury rates (yields) are as shown below. Maturity Treasury rate 5 4.0% 10 4.3% 15 4.6% 20 4.9% Current credit spreads (in
The current U.S. treasury rates (yields) are as shown below.
Maturity | Treasury rate |
5 | 4.0% |
10 | 4.3% |
15 | 4.6% |
20 | 4.9% |
Current credit spreads (in basis points) for various bond rating categories and maturities are as shown below.
Years to Maturity | ||||
Rating | 5 | 10 | 15 | 20 |
AA | 100 | 120 | 140 | 170 |
A | 120 | 140 | 160 | 180 |
BBB | 200 | 220 | 240 | 260 |
Company DebtCo issued 20-year bonds with a 4% coupon rate (semi-annual payments) 5 years ago. The bonds are currently rated A. What should be the bonds price today (par = $1000)?
Show your answer in $ and round to two decimals (e.g. $xxx.xx).
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