finance

find both company’s financial pages at: 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 dividends per share. Find both copany’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 bond.

 

1. List the pertinent information on the bond you chose and then calculate the price of one bond from both companies.

 

 2. Which bond is receiving the higher price? Explain your answer.

 

 3. From a time value of money frame of mind what does each rate say about the viewpoint on the time value of money?

 

 4. Which company has a better credit rating? Explain your answer.

 

 5. Based on the credit rating which company do you believe the bank feels more secure will pay back the loan? Explain your answer.

 

 6. Why does the bank charge more interest for one company than the another?

 

 7. What does the credit rating say to investor?

 

 8. Which bond looks is more finanically attractive? Explain why do you chose the answer you did.

  

   700 – 1,000 words cities and References

  

Part II: Understanding how to properly find the value of a stock using the dividend growth rate is a fundamental building block in valuation. Using the same two companies, evaluate each stock using a constant dividend growth model

 

1. Calculate the future growth rate for both companies.

 

2. Which stock has better growth rate? Do you agree with this assessment? Explain. Support your answer with either a description of a new product growth or from past growth performance.

 

3. Calculate the future stock price for both companies.

 

4. From a time value of money point of view stand point what does the calculated stock price say about the market’s view on the time value of money for each stock?

 

5. Compare the calculated stock price with the current stock price for both companies.

 

6. Is either stock underpriced or overpriced? Explain.

 

7. Should an investor purchase either of those stocks?

 

8. Should one stock out perform the other?

 

9. Based on the ratings found in Phase 4, does one stock seem more finally healthy? Explain.

 

10. Does this financial health make a stronger case to invest in the stock? Explain.

 

           700 – 1,000 words Cities and References and please elaborate on the answers to the questions that are given that the correction from my professor.

 

Sheet1

:

Maturity Value 1000
Coupon Rate:

												Morgan Stanley: Bond Id: 61747YCK9
	Coupon Rate:	4.20%
Maturity Years	2.416	0.4166666667	(11/20/2014)-(6/18/2012)
	Maturity Value		1000
YTM: (18/06/12)	4.164%
Bond Valuation	$1,000.82
Citi Group: Bond ID 172967CQ2
5%
Maturity: 09/15/2014	2.25	0.25	(09/15/2014)-(6/18/2012)
YTM: (18/06/12)	3.78%
Bond Valueation	$1,026.08

BOND PRICING

Dona Norman

FINC390-1302A-06

Professor Criniti

May 6, 2013

Introduction

In the present paper, the discussion shall be regarding pricing of bonds of particular organizations. The organization which has bonds and provides dividends to the shareholders is taken into account in present situation. The points into account shall include the value of the bond or credit rating of the other organizations. The organization which shall be useful for the banks according to the credit rating shall also be taken into account.

Selected Organization

Two organizations are selected for the present situation. The organizations include Morgan Stanley and Citi Group Inc. in their respective fields, both the organizations have done commendable job. These organizations provide bonds to their investors and interest is also provided by these organizations on the bonds issued by them. The organization Morgan Stanley has long term debts in its balance sheet (CITI Group Inc. n.d.)). The value of bond of Morgan Stanley is $1000.82 and that of Citi Group Inc. is $102.08. In relationship to Morgan Stanley length till maturity is 2.14 years and for Citi Group, the bonds are perpetual bonds.

The yield to maturity for Morgan Stanley is 4.164 and that of Citi Group is $3.78. The price of bond