stage 4 finc 330.docx - Andrew Braun Stage 4 Project Finc...

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Andrew Braun Stage 4 Project Finc 330
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Introduction For this project, there will be serval key factors that will be taken a look at Norfolk Southern. The first section will be looking at two different bonds. These bonds will look at the several different computations to find the worth of the bond. The second point that is going to be tackled in this project is the finical lavage ratios. There will be a couple of question regarding the overall value of the company’s bonds. Lastly, the whole company stock profile will also be examined from the last few years. This will also include using the CAPM calculation to find a required return of assets. Bond Computations: 1. Name Maturity Date Amount $ (Mil) Credit Quality Price Coupon % Coupon Type (Fixed/Floating) Callable Rule 144A Yield to Maturity % Norfolk Southern 5.75% 04/01/2018 595.9--- 101.3 5.750Fixed No No 2.33 Norfolk Southern 5.9% 06/15/2019 500.0--- 106.0 5.900Fixed No No 2.04 2. current price of bond . A. (100/10)*101.30=1013.00 B. (100/10)*106.00=1060.00 3. Coupon price A. 5.750%*1000=57.50 B. 5.900%*1000=59.00 4.Bond yield (Coupon price/current price of bond) A. 57.50/ 1013.00=5.68% B. 59.00/ 1060.00=5.57%
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5. A. Macaulay Duration = 1 Modified Macaulay Duration =0.9772 B. Macaulay Duration= 1.9462 Modified Macaulay Duration= 1.9073 Part 1 As part of the assignment, the bond and various computations of bonds such as the current price of a bond, the yield of the bond were presented from choosing two from Norfolk Sothern. For the present amount of the bond, is calculated by taking 100 stocks divide by 10 and then afterward multiplying by the price of the bond. The A price of price of the bond is 1013.00, while B price of the bond is 1060.00. The next calculation of the project is the coupon price. Calculating the coupon price is taking the coupon percent and multiplying the par value of the bond. The current coupon price of Part A is 57.50, while for Part B is at 59.00. The third calculation that was looked at for this part of the project is the bond yield. Calculating the bond yield takes the Coupon price/current price of the bond. The bond yield for component A is at 5.68%, while the bond yield for part B is 5.57%. The last calculation that is taken at look during this part of the project is both the Macaulay Duration and the Modified Macaulay Duration. The estimate was carried from the website called but upside. The calculation for part A for the Macaulay Duration is 1, and Modified Macaulay Duration is 0.9772, while part B for the Macaulay Duration is 1.9462 and Modified Macaulay Duration is 1.9073. The bond that would choose to buy for investment would be Norfolk Southern 5.75%.For starters; even though the amount of the total bond is higher, everything else is in favor of a lower amount of buying a bond. The on favorability that would be enticing to buy now would be the price of a single bond. The difference in price for both bonds listed is about five dollars of difference, in which Part A is the cheaper of the two. One thing that is going to be kept an eye on
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if anybody decides to wait out a bond, later on, would be a discount rate of a bond. A "discount bond" sells for less than its face value, or par value. The price of the issuing company or governmental agency will ultimately pay when it redeems the bond. (the editors of Kiplinger's
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  • Summer '15
  • Investing, Financial Ratio, Bond duration, Norfolk Southern

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