Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Copy the bond information of two bonds issued by THE COMPANY (SELECTED BY INSTRUCTOR) that contain the Last Price. You can create a screenshot

1. Copy the bond information of two bonds issued by THE COMPANY (SELECTED BY INSTRUCTOR) that contain the Last Price. You can create a screenshot with the bond information and paste it in the project. 2. What were the last prices of the bonds (listed in the Last Sale column)? Assume that par value of the bond is $1,000. How much the investor will pay for the bond if he/she purchased the bond at the Price listed in the Last Sale column. Show your work in your project. Bond 1: $1001.20 > $100.12 x $1000 /100= $1001.20 Bond 2: $972.80 > $97.28 x $1000 /100= $972.80 3. Assume that par value of the bond is $1,000. Calculate the annual coupon interest payments. Show your work in your project. Bond 1: The annual coupon interest payment for Bond 1 will be $60 annually. Bond 2: $58.75 annually 4. Assume that par value of the bond is $1,000. Calculate the current yield of the bonds. Show your work in your project. Bond 1: Current Yield= Annual Coupon/Current Price $60/$1001.2 x 100 = 5.993% Bond 2: 58.75/972.8 x 100= 6.039% 5. How much is the YTM listed on the website of the bonds (in the Last Sale column - Yield)? (No calculations are required for this question). Bond 1: YTM is 6.11% Bond 2: YTM is 6.23% 6. Write a 1-2 page of the analysis of the bonds. In your analysis you should answer the following questions. Please explain your answer to each question. a. If you are going to buy a bond issued by THE COMPANY, which bond would you choose? Why? Bond number 2 would be an ideal investment. YTM is higher than bond one which means higher expected returns. In addition, b. Are these bonds callable? If the bonds that you chose are callable (non-callable), will it change your decision to buy them? c. What is the bonds rating? What important information does this analysis provide? d. If you are an investor who is looking for a bond to invest in, are you going to buy a bond that you chose? e. In Research Project Part 2 you analyzed debt/equity and financial leverage ratios. How do these ratios support your decision to buy these bonds or not

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Get Rich With Dividends

Authors: Marc Lichtenfeld

3rd Edition

1119985552, 978-1119985556

More Books

Students also viewed these Finance questions

Question

Describe the civil commitment process and types of civil commitment

Answered: 1 week ago