Next you see 34 the year the bond matures which in

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 5) Bonds Cur. Yld. Vol Close Net Chg. 3/4 PacBell 6 5/8 34 6.7 115 99 1/2 In the first column you find three pieces of information. The first is the abbreviation for the company that issued the bond. Here you see “PacBell,” which stands for Pacific Bell, the telecommunications company. Next to that you see “6 5/8,” which indicates the coupon rate of the bond. Next you see “34,” the year the bond matures, which in this case it is 2034. In the second column you find the current yield. (We showed how to compute the yield on a bond earlier.) This current yield means that if the bond is purchased today (hence the word current), it will provide a yield of 6.7 percent. In the third column you find the volume of sales in dollars for a particular day. The number here is 115, so the dollar volume today is $115,000. The fourth column indicates the closing price for the bond on this particular day: 99 1/2. Bond prices are quoted in points and fractions; each point is $10. Thus, 99 1/2 is $999.50 (99.5 10 $999.50). In the fifth column we see the net change for the day. The “ 3/4” means the price on this day was $7.50 lower than it was the day before. At City Hall in New York City the city government might decide that the city needs a new football stadium and that the best way to finance construction of the stadium would be to sell bonds. What do we call the type of bonds that the city would sell? Treasury Bonds Not all publications present Treasury bond information in exactly the same format. The following format is common. (1) (2) Rate Maturity 7 3/4 Feb. 09 (3) Bid 105:12 (4) (5) Ask Chg 1 105:14 (6) Yield 5.50 Section 2 Bonds 447 16 (428-459) EMC Chap 16 Storing your valuables in a lock box is safe and secure but offers no return on your assets. Buying high-risk stocks and bonds, on the other hand offers an opportunity for high returns—and high losses. What sort of investment strategy do you think is the wisest? 5/8/06 5:05 PM Page 448 In the first column we find...
View Full Document

This document was uploaded on 01/16/2014.

Ask a homework question - tutors are online