Understanding how to properly value a vanilla bond - use as a guide only

Feb 3rd, 2012
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Part I Deliverable Length: 700-1000 words Understanding how to properly value a vanilla bond is essential for finance. Find a company with debt and that pays dividends. You can use the following stock screener to find a company:http://www.google.com/finance/stockscreener. Add the criteria of long-term debt to assets to ensure the company has debt. Add the criteria of dividend per share. Find the company’s financial pages at:http://www.sec.gov/edgar.shtml. Look at the long-term debt on the balance sheet. Determine the coupon price, the length until maturity and the yield to maturity. Calculate today’s price of the bond. • List the pertinent information on the bond you chose and then Calculate the price of one bond from one company. • Choose another company, find a bond, list all pertinent information and calculate today’s price. • Which bond is receiving the better price? Explain your answer. • From a time value of money frame of mind, what does each rate say about the viewpoint on the

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