Bonds can be issued by the federal government, state and local governments, and US corporations. A mortgage bond is a promissory note in which the issuing company pledges certain real assets as security in exchange for a specified amount of money. A debenture is an unsecured promissory note, backed only by the general credit ol the issuer. The bond price of either a mortgage bond or debenture is negotiated between the asked price (the lowest price anyone will accept) and the bid price (the highest price anyone wants to pay)

(Alexander, Sharpe, and Bailey, Fundamentals of Investments, 1993). The table on page 47 contains the bid prices for a sample of 30 publicly traded bonds issued by utility con~panies.

a. A frequency histogram (p. 47) was generated using SPSS. Note that SPSS labels the midpoint of each measurement class rather than the two endpoints.

Interpret thc histogram.

b. Use the histogram to determine the number of bonds in the sample that had a bid price greater than

$96.50. What proportion of the total number of bonds is this group?

c. Shade the area under the histogram that corresponds to the proportion in part b.