AT&T, Dell, and IBM - 20020

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AT&T, Dell, and IBM


Bonds from ATT, Dell, and IBM ( W4A3) Week four: assignment 3

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

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

2.         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 Description

Semi-annual periods = 25yrs *2

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AT&T, Dell, and...