| 6.1 | Bond Quotes. You can find current bond prices at
www.nasdbondinfo.com.
You want to find the bond prices and yields for bonds issued by Georgia Pacific.
Enter the ticker symbol "GP" to do a search. What is the shortest maturity bond
issued by Georgia Pacific that is outstanding? What is the longest maturity bond?
What is the credit rating for Georgia Pacific's bonds? Do all of the bonds have the
same credit rating? Why do you think this is? |
| | |
| 6.2 | Yield Curves. You can find information regarding
the most current bond
yields at money.cnn.com. Follow the "Bonds & Rates" link (look
under
"Markets & Stocks") and the "Latest Rates" link. Graph the yield curve for U.S.
Treasury bonds. What is the general shape of the yield curve? What does this
imply about expected future inflation? Now graph the yield curve for AAA-, AA-,
and A-rated corporate bonds. Is the corporate yield curve the same shape as the
Treasury yield curve? Why or why not? |
| | |
| 6.3 | Default Premiums. The St. Louis Federal Reserve
Board has files listing
historical interest rates on their Web site www.stls.frb.org. Find your way to the
"FRED" data, then "Interest Rates." You will find listings for Moody's Seasoned
Aaa Corporate Bond Yield and Moody's Seasoned Baa Corporate Bond Yield. A
default premium can be calculated as the difference between the Aaa bond yield
and the Baa bond yield. Calculate the default premium using these two bond
indices for the most recent 36 months. Is the default premium the same for every
month? Why do you think this is? |
