Description
Understanding how to properly value a vanilla bond (a plain bond) is essential for finance. Using the following Web site, find 3 different funding structures. Describe for each structure: security type, term, and yield. Furthermore, take a look at each of their offering documents, and provide a short description of the information found in the documentation.
Each bullet is its own paragraph and response
- Why do the different types of bonds get different rates? Explain your answer.
- What makes each of the different structures different? Explain your answer.
- What does the rate given say about the credit rating for each issuer? Explain your answer.
- How does credit rating affect the rate given to the issuer? Explain your answer.
- Which structure has the best credit rating based on the yield given to each structure? Explain your answer.
- What is the credit rating supposed to tell you? Explain your answer.
- Which bond is receiving the best price? Explain your answer.
- Why does having a good credit rating matter to the issuer? Explain your answer.
Explanation & Answer
hello, all points are well explained on independent paragraph as per your instructions.
Running head: BONDS
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Bonds
Name of Student
Name of Professor
Course Title
Date
BONDS
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Bonds can either be subjected to the following types of rates: Fixed Rate Bonds, Floating
Rate Bonds and Indexed Bonds. Mostly, bonds are subjected to numerous rates based on whether
total nominal yield is fixed or variable. Fixed Rate Bonds involves rates whereby nominal yield
remains fixed without any form of change over the lifetime of the bond. Floating Rate Bonds is
defined as rate in which nominal yield varies over the life of the bond (Chaipravat, 2005). Lastly,
we have Indexed Bonds in which nominal yield varies in response to changes within its underlying
index.
Numerous bond structures are based on indivi...
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