Valuing Bonds

  

You open your Wall Street Journal (WSJ) on the morning of February 31, 2008, and see the following bond quote for General Mills, Incorporated. Based on this WSJ information, answer the following questions.

  

Company (ticker)

Coupon

Maturity

Last Price

High

Low

Change

Yield %

 

Proctor & Gamble CO   (PG.HD)

5.550%

Mar 2037

96.124

96.124

95.933

-0.245

5.825

Assignment

1. What is the YTM for this Proctor & Gamble’s corporate bond?

2. What is the coupon yield of this bond over the next year?

3. If your required rate of return for a bond of this risk-class is 6.2 %, what value do you place on this Proctor & Gamble bond?

4. At this required rate of return of 6.2 % are you interested in purchasing this bond?

5. If you purchased this Proctor & Gamble bond for $961.24 yesterday and the market rate of interest for this bond increased to 6.0 % today, do you have a gain or loss? How much is that gain or loss in dollars?

The mini case is required to be completed. It is due on Sunday at 11:59pm. You are to write a minimum of 5 pages using in-text citations and the most recent published journals. All assignments must follow APA format style and submit for grading. The format of the cover page: Title, First Last Name, Course Title, Professor’s Name, Date Submitted. See attached APA format of referencing your paper.