Download: At&t, dell, and ibm solution

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Week 4: 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.

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