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Valuing Bond prices, spreads, and yields

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6. The spread between ACME corporation's note with a coupon of 6.5%, seven-year remaining term, and selling for 101-3/8 and ACME corporation's debenture with a coupon of 9.5%, 18-year remaining term and selling for 98-3/4 is
a. 338 basis points.
b. 339 basis points.
c. 340 basis points.
d. 341 basis points.

8. The asking yield on a Treasury note with one year remaining to maturity is 2.31%. The asking yield on a Treasury note with two years remaining to maturity is 3.12%. Using simple linear extraction, calculate the asking yield on a Treasury note with 1.5 years remaining to maturity.
a. 0.99%
b. 1.56%
c. 2.98%
d. 2.715%

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Solution Summary

We examine the basis point spread of two bond securities with different maturities

Solution provided by:
Robert Reinhart, MBA
Education
  • MBA, Merage School of Business, Univ of Cal, Irvine
  • BA, Univ of Cal, Irvine
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