Unit 3 IP Assignment: Deliverable Length 700 words in a Word file. Submit an Excel Spreadsheet showing calculations (submit separately). Fill out the 4 Tables completely.

A.

1.Bond Table 1: To fill out the first table, you will need to select 3 bonds with maturities between 10 and 20 years with bond ratings of “A to AAA,” “B to BBB” and “C to CC” (you may want to use bond screener at the http://finance.yahoo.com/). All of these bonds will have these values (future values) of $1,000. You will need to use a coupon rate of the bond times the face value to calculate the annual coupon payment. You should subtract the maturity date from the current year to determine the time to maturity. The Web site should provide you with the yield to maturity and the current quote for the bond. (Be sure to multiply the bond quote by 10 to get the current market value.) You will then need to indicate whether the bond is currently trading at a discount, premium, or par.

2. Analysis of Bond Table 1:

Organize your work under 3 headings:

•Explain the relationship observed between ratings and yield to maturity.

•Explain why the coupon rate and the yield to maturity determine why the bonds would trade at a discount, premium, or par.

•Based on the material you learn in this Phase, what would you expect to happen to the yield to maturity and market value of the bonds if the time to maturity was increased or decreased by 5 years?