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Question;Task Type:Individual Project;Deliverable Length:Word document of 700?1,000 words with attached Excel spreadsheet;showing calculations Points Possible:150 Due Date:6/16/2014 11:59:59 PM;CT;Weekly tasks or;assignments (Individual or Group Projects) will be dueby Monday, and late submissions will be assigned;a late penalty in accordance with the late penalty policy found in the;syllabus. NOTE: All submission posting times are based on midnight Central;Time.;Key;Assignment Draft;After engaging in a;dialogue with your colleagues on valuation, you will now be given an;opportunity to apply principles that were presented in this Phase. Using a;Web site that provides current bond pricing and yield information, you will;complete and analyze the tables illustrated below. Your mentor suggests using;a Web site similar tothis;one.;To fill out the first;table, you will need to select 3 bonds with maturities between 10 and 20;years with bond ratings of "A to AAA," "B to BBB" and;C to CC." All of these bonds will have these values (future;values) of $1,000. You will need to use a coupon rate of the bond times the;face value to calculate the annual coupon payment. You should subtract the;maturity date from the current year to determine the time to maturity. The;Web site should provide you with the yield to maturity and the current quote;for the bond. (Be sure to multiply the bond quote by 10 to get the current;market value.) You will then need to indicate whether the bond is currently;trading at a discount, premium, or par.;Bond;Company/;Rating;Face Value (FV);Coupon Rate;Annual Payment (PMT);Time-to Maturity (NPER);Yield-to-Maturity (RATE);Market Value (Quote);Discount, Premium, Par;A'-Rated;$;1,000;B'-Rated;$;1,000;C'-Rated;$;1,000;To complete the second;table, you can use most of the data you included in your first table, except;now you will add 1% to the yield to maturity and recalculate the market value;(present value) of the bond and indicate whether it would trade at a;discount, premium, or par.;Bond;Company/ Rating;Face Value (FV);Coupon Rate;Annual Payment (PMT);Time-to Maturity (NPER);Yield-to-Maturity increased by 1% (RATE);Market Value (PV);Discount, Premium, Par;A'-Rated;$;1,000;B'-Rated;$;1,000;C'-Rated;$;1,000;In the third table, you will;follow the same steps as in the second table, except you will now subtract 1%;from the yield to maturity, recalculate the market value (present value) of;the bond, and indicate whether it would be trading at a discount, premium, or;par.;Bond;Company/ Rating;Face Value (FV);Coupon Rate;Annual Payment (PMT);Time-to Maturity (NPER);Yield-to-Maturity decreased by 1% (RATE);Market Value (PV);Discount, Premium, Par;A'-Rated;$;1,000;B'-Rated;$;1,000;C'-Rated;$;1,000;After completing the;three tables, explain your findings and why your calculations coincide with;the principles related to bonds that were presented in the Phase. Be sure to;address the following;?;Explain the relationship observed;between ratings and yield to maturity.;?;Explain the relationship;observed as yield to maturity (required rate of return) increased by 1%.;?;Explain the relationship;observed as the yield to maturity (required rate of return) decreased by 1%.;?;Explain why it should;have been predictable based on a coupon rate and the yield to maturity why;the bonds would trade at a discount, premium, or par.;?;Based on the material you;learn in this Phase, what would you expect to happen to the yield to maturity;and market value of the bonds if the time to maturity was increased or;decreased by 5 years?;Be sure to document your;paper with in-text citations, credible sources and a list of references used;in proper APA format.;Reference;Bond finance. (n.d.). Retrieved from;the Yahoo! Finance Web site:


Paper#41511 | Written in 18-Jul-2015

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