Question: The following bond quotations are taken from the Wall Street Journal dated Friday, September 5, 2003:
|
Company
|
Coupon
|
Maturity
|
Last Price
|
Yield
|
|
International Paper (IP)
|
6.75
|
01- Sep- 2011
|
108.2
|
5.468
|
|
Sara Lee (SLE)
|
3.875
|
15-Jun-2013
|
89.7
|
5.235
|
|
Wells Fargo (WFC)
|
7.25
|
24-Aug-05
|
101.2
|
6.952
|
|
General Motors (GM)
|
7.125
|
15-Jul-13
|
109.65
|
2.191
|
|
Lincoln National (LNC)
|
6.2
|
15-Dec-11
|
105.9
|
5.307
|
[A] Describe why the International Paper bond is selling at a premium but the Sara Lee is selling at a discount.
[B] Explain why is the yield [yield to maturity] on the General Motors bond so much higher than the yield on the Sara Lee bond?
[C] Explain why is the yield [yield to maturity] on the Wells Fargo Bank bond so much less than the yield on the Lincoln National Corp. bond?