Bond & Valuation

Chapter 5 Bonds and Their Valuation Mini-Case Sam Strother and Shawna Tibbs be vice-presidents of Mutual of Seattle damages Company and co-directors of the companys bounty fund management division. A major new client, the northwestern Municipal Alliance, has requested that Mutual of Seattle depict an investment seminar to the mayors of the represent cities, and Strother and Tibbs, who will make the actual presentation, belt down asked you to help them by answering the following questions. Because the Boeing Company ope crops in one of the leagues cities, you are to work Boeing into the presentation. a.What are the key features of a bond? tell: 1.Par or face value. We broadly speak assume a $1,000 rack up value, but par discharge be anything, and much $5,000 or more is used. With registered bonds, which is what are issued to daytime, if you bought $50,000 worth, that aggregate would appear on the certificate. 2.Coupon m easure. The dollar coupon is the rent on the capital borrowed, which is generally the par value of the bond. The coupon pose is the one-year interest payment divided by the par value, and it is generally set at the value of r on the day the bond is issued. 3.Maturity. This is the number of years until the bond matures and the issuer essential hark back the loan (return the par value).

4.Issue date. This is the date the bonds were issued. 5.Default run a risk is inherent in all bonds except treasury bonds--will the issuer permit the cash to make the promised payments? Bonds are rated from AAA to D, ! and the lower the institutionalise the riskier the bond, the higher its default risk premium, and, consequently, the higher its required rate of return, r. b.What are call victuals and sinking fund furnish? Do these provisions make bonds more or less(prenominal) uncivilised? Answer:A call provision is a provision in a bond contract that gives the issuance flowerpot the right to redeem the bonds under specified cost anterior to the...If you want to get a full essay, coordinate it on our website: OrderCustomPaper.com

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