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problem: The following bond quotations are taken from the Wall Street Journal dated Friday, September 5, 2003.

Company

Coupon

Maturity

Last Price

Yield

International Paper 

6.75

Sep. 1, 2011 

108.198

5.468

Sara Lee

3.875

15-Jun-13

89.700

5.235

Wells Fargo

7.25

24-Aug-05

109.645

2.191

General Motors

7.125

15-Jul-13

101.201

6.952

Lincoln National

7.125

Dec. 15, 2011

105.903

5.307

[A] Describe why the International Paper bond is selling at a premium but Sara Lee is selling at a discount

[B] Why is the yield [yield to maturity] on the General Motors bond so much higher than the yield on the Sara Lee bond?

 

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