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Fundamentals of Corporate Finance, 4/c/e
Fundamentals of Corporate Finance, 4/e
Stephen A. Ross, Massachusetts Institute of Technology
Randolph W. Westerfield, University of Southern California
Bradford D. Jordan, University of Kentucky
Gordon S. Roberts, York University
Interest Rates and Bond Valuation

Internet Application Questions



1

The bond spread refers to the difference in yields between two bonds. Usually, the lower yielding bond is a risk-free bond such as a Government of Canada bond with equivalent maturity. Go to the following website and explain why bond spreads narrow as you get closer to maturity. What does the size of the spread tell you?
http://www.finpipe.com/spread.htm
 
2

The Bank of Canada maintains a site containing historical bond yields. Pick a short-term bond, and a real return bond, and compare their yields. What is your expectation of inflation for the coming year?
 
3

Barclays Global Investors has recently started two new exchange traded bond funds, iG5 and iG10. Explain the advantage of investing in exchange traded bond funds relative to buying the bonds outright.
 




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