# Bond Valuation and YTM of Bonds

Not what you're looking for?

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+

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.

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

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

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.

##### Purchase this Solution

##### Solution Summary

You are given the following data on bonds from AT&T, Dell, and IBM. Each bond has a par value of $1000.

a. 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.

b, Determine the yield to maturity (YTM) on the bonds given the following prices.

AT&T

Dell

IBM

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

d. 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.

##### Solution Preview

Dear Student, As you know, Brain Mass Experts are not allowed to provide complete, hand-in ready solutions, so I will be assisting you, but leaving some conclusions for you to make on your own.

Foundation of Financial Management

You are given the following data on bonds from AT&T, Dell, and IBM. Each bond has a par value of $1000.

Coupon Maturity Frequency Rating

AT&T 6.80% 36-05-15 Semiannual A

Dell 6.50% 38-04-15 Semiannual A-

IBM 8.375% 19-11-01 Semiannual A+

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.

The Value of a bond is ...

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

##### Lean your Process

This quiz will help you understand the basic concepts of Lean.

##### Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

##### Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

##### Learning Lean

This quiz will help you understand the basic concepts of Lean.