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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

01 / 10 / 2021 Assignment

This paper circulates around the core theme of 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 together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.

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 CCC” (you may want to use bond screener at the Web site linked above). 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.

Bond

Company/
Rating

Face Value (FV)

Coupon Rate

Annual Payment (PMT)

Time-to Maturity (NPER)

Yield-to-Maturity (RATE)

Market Value (Quote)

Discount, Premium, Par

A-Rated


$1,000







B-Rated


$1,000







C-Rated


$1,000







  • 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?


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