402 flatio Curent 100 arbatyayal 2:04 11 Nat Owners PART FOUR INVESTING IN FIXED INCOME SECURITIES 40 w the base haudity and profitabiber at the firm, the extent to which the being. o service is deb de and the ability of the line & Table Financial Ration tant pertain to wal companipel Company Centure 2 Company Company 5 Company & Chimpany 128 A 1.32 x 0.33 x 103 x 0.50 141x 110- 1.3 0.01 0.83 18.75 2.8% 5.9% 12.95 100% 11.5% 15.8% 6 26.45 25.35 26.6% 150% 8275 18.99 MUIS Excel with Spreadsheets 14.84 1945 23.99 4615 B. X 4.5 = 970% 1.5% 1.7 X 5.1% 24 x 213 23- 20.4% 71.2% 30.2% 64x K 18:39 dows 10-ropedies, me qui va akaenly the most i vast peate and SANT ANTER lect and read them to corren labe meong-damdon the m gledangkan pen the tem tonadurtancity tal ity to own streaza rective to the totalment eng-ter der afh har hatt The financial cas shown above are ten helpfol in carrying out such analysis: it ce 100, 2) quick cm, 13 are profit megin, 14 se on total capital, 15) long-teleht o capital, were equity rano, (7 pretax interese coverage and 18) cash flow to total dh first wisates measure the liquidity of the firm, the next two its profitability, the .c the detto, and the final to the ability at the firm to service its debe load. ito tato t ww the rano, the better. For all the others, the higher the ratin, the better.) The table istot of the nation sex different companies. Thes of these companies have bonds that carry investment-grade raries The ther companies carry junk bond ratings. Judging by the information in the cable, which the comp buve the levement-grade bonds and which three have the junk bonds? Beetly lain yr selections One of these six companies is an AAA-rated firm and one is R-rated. Idently thwac panies. Binefly explain your selections Of the remaining four companies, one carries a AA rating, one carries an Ara and wa are BB-rated. Which companies are they? The cash flow component of bond investments is made up of the annual interese paments. the tune option value or its par value Just like other time-value of money cosida the bond cash thows are discounted hack in order to determine their present value In comparing bonds to stocks, many investors look at the respective returns. The ne returns in the bend marker are made up of both current income and capital gains. Bond analysis should include the determination of the current yield as well as a specific hodie Che January 13, 2010, you gather the following information on three corporate ben bizal by the General Pineapple Corp (GPL), Remember that corporate honds are quered spe of the par value. Asume the par value of each hand to he $1,0X10, These delicitares are dan 42% **** 2123 CHAPTER 10 FIXED-INCOME SECURITIES 403 tights of a point Create a spreadshoot that will del and at the following th over problems. Current Yield Volume Close Bonda GPG 5.3 13 GPC 60520 25 105 45 900 GPC 34 22 37 104% Questions Calculate the content yards for these three GPC corporare debentures. b. Calculate the holdun period returns under the following three scenarios L. Purchased the $5,3 hods for 990 im January 13, 2009. 2. Parchased the 565 for 98% on January 13, 2009, 3. Panchased the 74 bands for 985 un jennary 13, 2007. c. As of January 15, 2010, GPCromo stack had a close price of $26.211. The prior of CPC stock in Jamry 2007 was $25.25. The stock pada 2007 dividend of $0.46, a 2004 dividend of $0.46, an 2009 diciend of $0,46. 1. Calculate the curre lanary 13, 20201 dividend yield for security Assasuing you punched the sock in Jary 2007, what is the holding period samas olary 2009 The hart shows the bes ut hendes for which Seandard & Poor's sed ning spgrades e desegrades every year to 2981-2008 a. What is the cred in the number of natingskans och spends and desi time? Why? b. Which type of sudedami Whey do you think tank In what dre Chapter-Opening Problem *****