Question 8 On 7/1/2020, you invested in a muni bond with a sinking fund. The bond matures on 7/1/2023 and pays an annual coupon of 5.5%. The sinking fund will be chosen by random drawings. The current face amount of the issue is $76.7 Million and the following amounts, $24 Million and $25.6 Million will be redeemed at par by random drawing respectively on 7/1/2021 and 7/1/2022. You have paid $109 for this bond for $100 of face value. Make sure you provide an excel file with your calculations. a) What yield do you expect to make on the investment? b) What is the worst yield that you could make on the investment? Hint: if it is redeemed on 7/1/2021. c) What is the best yield that you could make on the investment? d) What is the yield that you would make on the investment if it is redeemed on 7/1/2022? Hint: find additional information on the bond below. Settings 649838JY Muni Report Alert Page 1/11 Security Description: Muni NEW YORK ST DORM AUTH REVENUES 94 No Notes MEM SLOAN KETTERING CANCER C CUSIP 649838JY6 98) PICK Ticker NYSHGR Cpn 5.500 Maturity 07/01/2023 Dated 03/01/1998 State NY 25) Municipal Bond 20 Series 27) Obligor Description Pages Municipal Bond Information Trading Information 11) Bond Info Issue Type REVENUE BONDS 1st Settle Dt 04/02/1998 12) Addtl Info Ult Borrower 13) Involved Parties Memorial Sloan-Kettering - Next Settle Dt 09/29/2020 10 Ad Cpn Info Maturity Type SINK Int Accrual Dt 03/01/1998 15) Credit Enhance Ext Redemption YES (Type: MANDATORY) 1st Coupon Dt 07/01/1998 16) Credit Ratings Coupon FIXED 5.500 Next Sink 07/01/2021@Par 17) Call Sched & ERP Prc/Yld @ Iss 105.635/5.100 For $ 24MM 18) Put Schedule Coupon Freq SEMI-ANNUAL 19 Sink & Est Sink Average Life 07/15/2022 20) Refunding Info Tax Provision FED & ST TAX-EXEMPT Week of Sale 03/09/1998 21) DES Notes Credit Enhancement Piece/inc/Par 5,000/5,000/5,000 Insurance/Program - NATL Quick Links Bond Ratings 31) TDH MSRB Trade Moody's(Undl) Aa3 32) CACS Material Evt 33) CF Filings Insured Aa3 34 CN Sec News S&P PAA- STA 35) HDS Holders Underlying AA- STA Fitch STA 66) Send Bond Underlying AA STA Australia 61 2 9777 8600 Brazil 5511 2395 9000 Europe 44 20 7330 7500 Germany 49 69 9204 1210 Hong Kong 852 2977 6000 Japan 81 3 4565 8900 Singapore 65 6212 1000 U.S. 1 212 318 2000 Copyright 2020 Bloomberg Finance L.P. SN 772440 EDT GMT+100 G747-695-2 26-Sep-2020 12:31:49 Screen saved as \\Client\C$\Users\GRC\Documents\Muni NY DES.gif 649838JY Muni Report Alert Settings Page 9/11 Security Description: Muni NEW YORK ST DORM AUTH REVENUES 94) No Notes MEM SLOAN KETTERING CANCER C CUSIP 649838JY6 98) PICK Ticker NYSHGR Cpn 5.500 Maturity 07/01/2023 Dated 03/01/1998 State NY 25) Municipal Bond 20 Series 27) Obligor Description Pages Sink Schedule 11) Bond Info Type RISING Bonds selected by lottery. Date Price Amount Date Price 13) Involved Parties Amount 14 Adj Con Info 07/01/2021 100.000 24,000,000.00 15) Credit Enhance 07/01/2022 100.000 25,600,000.00 16 Credit Ratings 07/01/2023 100.000 27,100,000.00 17) Call Sched & ERP 19) Put Schedule 19) Sink & Est Sink 20) Refunding Info 21) DES Notes 12) Addtl Info Quick Links TDH MSRB Trade 32) CACS Material Evt 33) CF Filings 34 CN Sec News 35) HDS Holders 66) Send Bond Australia 61 2 9777 8600 Brazil 5511 2395 9000 Europe 44 20 7330 7500 Germany 49 69 9204 1210 Hong Kong 852 2977 6000 Japan 81 3 4565 8900 Singapore 65 6212 1000 U.S. 1 212 318 2000 Copyright 2020 Bloomberg Finance L.P. SN 772440 EDT GMT-100 G747-695-2 26-Sep-2020 12:30:39 649838JY Muni 97) Settings NEW YORK ST DORM AUTH REVENUES Ticker NYSHGR Cpn 5.500 Maturity Settlement Date 07/01/20200 Price Sinking Fund Analysis 95) Buy 96) Sell CUSIP 649838JY6 03/01/98 State NY 0.000 07/01/23 Dated 109.000 Reinvestment Rate 2.230 Sink Type Rising with Annual Sinker Payments Outstanding 76,700 Issued 76,700 Mandatory Over Fund On the Next Sinking Date Sinkable Mandatory 24,000 07/01/21 Original 64.7% Voluntary 07/01/21 Currently 64.7% Yield Analysis Price Date Yield Duration Risk Eff Yield Yield to Worst 100.000 07/01/2023 2.374 2.816 3.033 Yield to Next Sink 100.000 07/01/2021 -3.279 0.987 1.094 -3.237 Yield to Maturity 100.000 07/01/2023 2.374 2.816 3.033 2.230 Yield to Longest Avg Life 100.000 07/15/2022 1.028 1.961 2.126 0.989 Yield to Shortest Avg Life 100.000 07/15/2022 1.028 1.961 2.126 0.989 Cash Flow Analysis Price Date Yield Duration Risk BP Sprd Workout Wst Sinks Taken Out At Par Vol Sinks Taken From Head Mandatory Sink to Mty 100.000 07/19/2022 1.024 1.972 2.139 -2.684 Mandatory Sink to Worst 100.000 07/19/2022 1.024 1.972 2.139 -2.684 0 x Vol+Mand to Mty 100.000 07/19/2022 1.024 1.972 2.139 -2.684 0 x Vol+Mand to Worst 100.000 07/19/2022 1.024 1.972 2.139 -2.684 Australia 61 2 9777 8600 Brazil 5511 2395 9000 Europe 44 20 7330 7500 Germany 49 69 9204 1210 Hong Kong 852 2977 6000 Copyright 2020 Bloomberg Finance L.P. SN 772440 EDT GMT-4:00 G747-695-2 26-Sep-2020 12:26:08 Japan 81 3 4565 8900 Singapore 65 6212 1000 U.S. 1 212 318 2000
