What does the credit rating say to an investor

Reference no: EM131141800

Vanilla Stock Valuation (Part 1 and & 2 both)

Part I: Deliverable Length: 700-1000 words Understanding how to properly value a vanilla bond is essential for finance. Find a company with debt and that pays dividends. You can use the following stock screener to find a company: https://www.google.com/finance/stockscreener. Add the criteria of long-term debt to assets to ensure the company has debt. Add the criteria of dividend per share. Find the company?s financial pages at: https://www.sec.gov/edgar.shtml. Look at the long-term debt on the balance sheet. Determine the coupon price, the length until maturity and the yield to maturity. Calculate today?s price of the bond. List the pertinent information on the bond you chose and then Calculate the price of one bond from one company. Choose another company, find a bond, list all pertinent information and calculate today?s price. Which bond is receiving the better price? Explain your answer. From a time value of money frame of mind, what does each rate say about the viewpoint on the time value of money? What does that tell you about the credit rating of each company? Which company has a better credit rating? Explain your answer. Based on the credit rating, which company do you think the bank feels more secure will pay back the loan? Explain your answer. Why does the bank charge more interest for one company than another? What does the credit rating say to an investor? Which bond looks more attractive from the company?s view point? Explain why you chose the answer you did.

Part II: Deliverable Length: 700-1000 words Understand how to properly find the value of a stock using the dividend growth rate is a fundamental building block in valuation. Using the same two companies, evaluate each stock using a constant dividend growth model. Calculate the future growth rate for both companies. Which stock has the better growth rate? Do you agree with this assessment? Explain. Support your answer with either a description of a new product growth or from past growth performance. Calculate the future stock price for both companies. From a time value of money point of view stand point what does the calculated stock price say about the market?s view on the time value of money for each stock? Compare the calculated stock price with the current stock price for both companies. Is either stock under or over priced? Explain. Should an investor purchase either of those stocks? Should one stock outperform the other? Based on the ratings found in Phase 4, does one stock seem more financially healthy? Explain. Does this financial health make a stronger case to invest in the stock? Explain.

Reference no: EM131141800

Questions Cloud

Describe the meaning of given principle : describe what is meant by the principle that we should, "Act so as to treat humanity, whether in your own person or that of any other, as an end and never as a means only."

Determine the value of w at which elastic instability occurs : All the members of the braced frame shown in Figure S11.3are of uniform section. Set up the stiffness matrix for the frame and hence determine the value of W at which elastic instability occurs. The loading on the members may be replaced by equiva..

What is nealons cost of equity capital when new shares sold : What is Nealon's cost of equity capital when new shares are sold, and what is the weighted average cost of the added funds involved in the issuance of new shares?

Response to merger or consolidation of services : Choose two issues or challenges that the leaders of todays health care organizations face - Reorganization in Response to Merger or Consolidation of Services

What does the credit rating say to an investor : What does the credit rating say to an investor? Which bond looks more attractive from the company?s view point? Explain why you chose the answer you did.

Find importance of effective marketing for medical practices : Appraise the key functions of Human Resources Management (HRM) and state your opinion as to whether or not HRM should be part of the strategic planning process for medical group practices. Support your rationale with specific examples.

Answer questions by reading given message : onsider the average employee of average intelligence and average education. Find ways to improve the document to make it easier to read and to understand.

In what ways have you given up rights : There theories can be helpful in examining how we today compromise our individual rights in order to be assured of security. In what ways have you given up rights in order to achieve security? To what degree is this a choice? Is this choice jus..

Determine the value of w at which elastic instability : All the members of the symmetrical rigid frame shown in Figure S11.2 are of uniform section. Determine the value of W at which elastic instability of the frame occurs in its own plane.

User Account

All Pages