Question

Using the Price History report, what was the OAS (LIBOR) for the HSBC Holdings PLC 2.013\% 22-SEP-2028 (404280CL1) bond as of January 31, \( 2022 ? \) \( 115.086 \) 105.447 105.123 \( 110.000 \)

Answer 1

The price of a bond when its interest rate is lower than the market rate can be calculated using the present value of its expected payments. At a 12% market interest rate, one would not pay more than $964 for a bond due to a return $1,080 in a year.

Step-by-step explanation:

The question asks to calculate the price of a bond when its interest rate is less than the market interest rate. In the provided example, the bond's expected payments one year from now are $1,080, which includes the final interest payment and repayment of the principal. If the current market interest rate is 12%, one could invest $964 in an alternative investment and receive $1,080 after one year. This calculation is based on the present value of the expected payment discounted by the market interest rate: $964(1 + 0.12) = $1080. The calculation indicates that a rational investor would not pay more than $964 for a bond that is expected to return $1,080 in a year's time when the market interest rate is 12%.

Answer 2

The OAS (LIBOR) for a bond is not typically provided in a price history report. The report usually contains the trade date, settlement date, price, yield, and other relevant information about each transaction.

How is that so?

The OAS (Option-Adjusted Spread) is a measure of the yield spread of a bond relating to a gauge rate, to a degree LIBOR, later allowing for possibility some entrenched alternatives.

To get the OAS (LIBOR) for the HSBC Holdings PLC 2.013% 22-SEP-2028 (404280CL1) bond as of January 31, 2022, you would need to use a monetary dossier aid that supplies this facts, in the way that Bloomberg or News service. You would need to record the bond's CUSIP number (404280CL1) or ISIN number into the platform's search function to reclaim data on the bond, containing its OAS (LIBOR).