ATT, Dell, and IBM Bond

Week 4 assignment 3

 

You are given the following data on bonds from  

AT&T

,

Dell

, and

IBM

. Each bond has a par value of $1000.

    AT&T Dell IBM 

Coupon

 

6.80

 

6.50

 

8.375%

 

Maturity

 

05/15/2036

 

04/15/2038

 

11/01/2019

 

Frequency

 

Semiannual

 Semiannual Semiannual 

Rating

 A A- A+ 

1. Calculate the value of the bond if your required return is 5 percent on  AT&T, 6.5 percent on Dell, and 8 percent on IBM.
2. Determine the yield to maturity (YTM) on the bonds given the following  prices.

    AT&T Dell IBM 

Price

 

$1,060.00

 

$1,016.57

 

$1,307.78

 

3.   
 Based on each bond’s ratings and your determination of its yield to maturity  explain how you rank each bond for risk and return.

 

1. Assume you had $10,000 to invest.  How many of each bond would you have?  What dollar amount of interest would each bond return on the investment for the  next year? What would your percentage return be for the year, that is, your  interest payments divided by the total amount invested? You must submit your  backup in Excel or other supporting documentation showing how answers were  reached.