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Unformatted text preview: Assignment 2 The following exercises are for each student to complete individually . Your responses must be typed, not handwritted. Use superscripts (x 5 ) and subscripts (x t ) where necessary. Be sure to list clearly all of the information you use in performing all of your calculations, and include with your assignment a print-out of the transactions you performed for this assignment. Your assignment cover page must include your name (unlike last time when we asked you to leave your name off the cover), student number, your section number and time (Section 1: 1-3pm, Section 2: 4-6pm, Section 6: 6-8pm), and your RPM homework account userid. Prior to handing in your assignment in class, you must hand in your assignment to Turnitin. Assignments are due at the beginning of class. 1.This question is based on bonds issued by AT&T Inc. and Verizon Communications Inc. a) What are the current bond ratings for these bonds? b) What are the current price, coupon rate, and yield to maturity for the AT&T bonds maturing in February 2018 and September 2040 and for the Verizon bonds maturing in April 2017? c) Is each bond currently trading at a premium or a discount? If the two AT&T bonds are different in this regard, discuss what might explain the difference. 2. Using at least 5 different maturities of US Treasury bonds, plot the yield curve based on current yields and then plot the yield curve again using yields from one month ago. (Both plots can appear in the same graph if they are clearly labeled.) Discuss how the yield curve has changed during that month, if at all. 3. In RPM, find a liquid US corporate bond to purchase. (If the bond is not sufficiently liquid, you will have trouble buying and selling the bond on RPM. If you start this question early, you will have time to try again if you end up with an illiquid bond.) Purchase some of these bonds. At least a day later, sell the bonds. Include an excerpt of your RPM transaction history from your RPM account with your solution set. bonds....
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This note was uploaded on 10/17/2011 for the course MANAGEMENT mgt393 taught by Professor Schneider during the Spring '10 term at University of Toronto.
- Spring '10