Reference no: EM13916244
1. First, calculate the value of a corporate bond using the information below. Do this calculation by hand and show all of your work! Second, convert the value to price; round to 3 decimals.
Settlement Date: 5/15/2016
Maturity Date: 5/15/2018
Coupon rate: 4.50%
UST Yield: 2.25%
Spread (bps): 125
Yield to Maturity: Calculate from Above Information
2. Calculate on paper (a) the Macaulay duration and (b) the modified duration. Show all of your work.
3. Using the modified duration you just calculated, (a) estimate what the price change of the bond would be if the U.S. Treasury yield declines 50 basis points. (b) Now calculate the new price. Do these calculations on paper.
4. Using the format highlighted in Question #1 as a guide, create a Bond Price calculator in an Excel spreadsheet. Next, in the cell below the "Yield to Maturity" cell, create a cell for PRICE. To the right of the "Price" label, insert Excel's PRICE formula.
a. Using the same inputs from question 1, use the Excel PRICE function to calculate the bond's price. Did you get the same answer that you calculated by hand? Copy and Paste your spreadsheet into your project paper.
b. Subtract 50 basis points from the U.S. Treasury yield in your Excel model. (i) Copy and Paste your spreadsheet results into your project paper. (ii) Compare this price to the new price you calculated in Question 3. How do they compare?
5. Reset your Excel model to the original information from question #1. Now change the maturity date to 5/15/2021. What happens to the price of the bond versus your answer from Question 1? Explain in one paragraph what happened to the price when you changed the maturity date and why. Copy and Paste your spreadsheet into your project paper.
6. I have placed an Excel spreadsheet on Blackboard (PROJECT BOND FIN 445 2015 Fall.xlsx). The spread data represents three sectors of the bond market: Investment Grade U.S. corporate bonds, High Yield U.S. corporate bonds, and U.S. dollar-denominated Emerging Market Corporate bonds. As an analyst, your job is to determine whether each of these sectors are fairly valued, overvalued, or undervalued. You will do the following:
a. Create a separate chart for each of the three data series.
b. Calculate the average spread for each data series, and plot on the chart.
c. Calculate +/- 1 standard deviation for each data series, and plot on the chart.
d. Copy each chart into your project paper.
e. Given where the current spread is (the last data point), give me an explanation for each data series as to whether each sector today is a buy, sell, or wait (assume you don't own any bonds, so "hold" is not an option). Each explanation should be no more than half of one page.
f. What other data or information that is not currently available to you might alter your buy/sell/wait decision? Maximum one-half page.
g. In one paragraph, rank the three bond sectors according to their relative value, i.e., if you had to make a choice, which would you buy 1st, 2nd, and 3rd? Explain your answer.
|
Elements in the composer style
: Explain why the other two (2) composers were ultimately not selected. Specifically identify the musical elements in the composer's style that you would like to be included in the new music written for your uncle.
|
|
Why do executives spend more time listening than do workers
: Why do executives and managers spend more time listening than do workers? Evaluate the following statement: "Technical proficiency has never been enough for professionals to grow beyond the staff level." Do you agree or disagree, and why?
|
|
The total costs
: Fill in the costs in the table below.If the shop repairs 12 cars in a week, the total costs are $.If the shop repairs 0 cars in a week, the total costs are $.
|
|
Enterprise system development life-cycle
: Information-gathering (5 points). Describe the information-gathering methods that can be used in analyzing requirements. This is about how to gather requirements and not requirements themselves.
|
|
Calculate the value of a corporate bond
: 1. First, calculate the value of a corporate bond using the information below. Do this calculation by hand and show all of your work! Second, convert the value to price; round to 3 decimals.
|
|
Identifying personal strengths when hiring future workers
: Identifying Personal Strengths When hiring future workers, employers look for hard skills, which are those we learn such as mastery of software applications or accountancy procedures, and soft skills.
|
|
Discuss the data determinants of success
: Propose an initiative that will address this problem within the department of your chosen healthcare organization. What specific relevant quality standard will this quality initiative address? Discuss the data determinants of success, as related to..
|
|
Development of riordan inventory management system
: The following is a set of five (5) user stories, comprised of information acquired from Riordan Manufacturing employees. These user stories will assist our team with the development of Riordan's Inventory Management System, which is currently in t..
|
|
Should all best practices be applied to all organizations
: Based on your experience and knowledge, should all "best practices" be applied to all organizations or are there some differences that need to be considered prior to implementing best practices?
|