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NEW QUESTION: 1
Cindy Philongy wants to purchase the Booboo.com bond shown below. It has a BBB-rating, a coupon of 3.60% and a price of 87.8141. What is the nominal yield spread for the Booboo.com bond, given that the comparable maturity Treasury has a YTM of 5% (selling at par) and the Booboo.com bond has a YTM of 7.6331%?
Present Value
A. 237 Basis Points.
B. 263 Basis Points.
C. 272 Basis Points.
Answer: B
Explanation:
Candidates should not be distracted from all of the extraneous information. The calculated values correspond with the Z spread, not the nominal spread. The nominal spread equals the YTM of
7 .6331% less the Treasury YTM of 5% = 2.6331% or approximately 263 Basis Points.

NEW QUESTION: 2



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