Stiltz Project 2 - Net Ids sgcohen2 kdunla2 mtgust2...

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Part 1: Bonds 1.) Par Value: $1,000.00 N (years) 25 N (2x per year) 50 annual coupon rate 9% annual coupon pmt $90.00 semi annual coupon pmt $45.00 Yield to Maturities Value of the bond 2% $2,371.86 5% $1,567.25 8% $1,107.41 11% $830.68 14% $654.98 17% $537.38 2.) Bond Name Years To Maturity Grease Gougers 2 Burns Power 15 Caterpillar 40 Bond's Price Interest Rate (APR) Grease Gougers Burns Power 2% $1,117.06 $1,774.23 4% $1,076.15 $1,447.93 6% $1,037.17 $1,196.00 8% $1,000.00 $1,000.00 10% $964.54 $846.28 12% $930.70 $724.70 14% $898.38 $627.73 3.) All-Comm Wally World Par value $1,000.00 $1,000.00 Coupon Payment $- $60.00 Net Ids: sgcohen2, kdunla2, mtgust2, rsilver3, snyder4, stiltz1 Section: Thursday 1:00 TA: Sena Durguner Bon
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Years To Maturity (N) 20 20 YTM 7% 7% Today's Price $258.42 $894.06 One Year from Today: Bond Price YTM All-Comm Wally World 5.50% $361.58 $1,058.04 7% $276.51 $896.64 8.50% $212.24 $768.31 Total Rate of Return All-Comm Wally World 5.50% 39.92% 25.05% 7% 7.00% 7.00% 8.50% -17.87% -7.35% 4.) Vandalay Industries SatTV Par Value: $1,000.00 $1,000.00 Coupon rate: 6.80% 6.80% Annual Coupon PMT: $68.00 $68.00 Semi-annual Coupon PMT: $34.00 $34.00 N ( years to maturity): 12 12 N (2x per year) 24 24 Sell for (PV): $890.00 $1,090.00 Yield to Maturity (YTM): 8.262354% 5.751331% Yield to Call (YTC): 13.194143% 5.525129% Which return do you think is more likely for each bond if market i to remain at their current level over the next 3 years? I think the yield to maturity is more likely for the Vandalay Industries bo selling at a discount initially. Also, the YTM is less than the YTC and th looking to make a profit. I think the yield to call is more likely for the Sa is selling at a premium initially and the YTM is greater than the YTC. O company is looking to make the most money, so they would give you th
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Par Value: 1000 annual coupon rate: 8% annual coupon pmt: 80 semi-annual rate: 4% semi-annual pmt: 40 Caterpillar $2,646.65 $1,794.89 $1,302.01 $1,000.00 $804.04 $669.82 $573.34 Short Circuit $1,000.00 $120.00 2% 5% 8% 11% 14% 17% $0.00 $500.00 $1,000.00 $1,500.00 $2,000.00 $2,500.00 Bond Values Vs. Required Returns Required Returns d Values 2% 4% 6% 8% $0.00 $500.00 $1,000.00 $1,500.00 $2,000.00 $2,500.00 $3,000.00 Interest Rate Risk Required Returns Bond Values
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20 7% $1,529.70 Short Circuit $1,754.50 $1,516.78 $1,324.37 Short Circuit 22.54% 7.00% -5.58% Callable Bonds N (years to call) 3 Call price 1065 Which bond has the most interest rate risk? The zero coupon All-Comm bond has the most interest rate risk based on this analysis. Since all the bonds have the same number of years to maturity, we can look at the coupon payment to determine the bond with the most interest rate risk. All-Comm has the lowest interest rate risk because it is a zero
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This note was uploaded on 05/05/2010 for the course FIN 221 taught by Professor Dyer during the Fall '09 term at University of Illinois, Urbana Champaign.

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Stiltz Project 2 - Net Ids sgcohen2 kdunla2 mtgust2...

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