What connections are there among economic trends analysis, bond market performance, and investment decisions? Discuss these connections.
Bond Performance Analysis and Interest Rate Trends Based on the course material presented in Week 3
The information on bonds can be found on the Bond section of the FINRA Market Data Center. To find the information on bonds, click on Search tab in the middle of the screen . Under Quick Search, complete the Issuer Name and Symbol fields, then click Show Results.
1. To grade your project your professor needs to see the information on the bonds you chose. Copy the bonds quotations into your project.
2. What were the last prices of the bonds ? What does this price mean?
3. Assume the par value of the bond is $1,000.
a. How much will an investor pay for a bond purchased at the price listed in the
Last Sale column?
b. Calculate the annual coupon interest payments.
Show your work in your project.
4. The YTM is listed in quotations of the bonds . What
does it mean?
5. Calculate the Macaulay duration and modified duration of these bonds. Use an
online duration calculator. Present the results of your calculations in your project.
How will changes in interest rates affect the bonds’ prices?
6. Using the forecast of interest rates that you found in
Stage 1 of the project, create a forecast of the bonds’ prices. Explain your results.
7. Write at least two pages of analysis of the bonds. Answer the following questions, explaining each answer.
a. If you are going to buy a bond, which bond would you choose? Why?
b. What connections are there among economic trends analysis, bond market performance, and investment decisions? Discuss these connections.
c. Look at the balance sheet and income statement of the companies. What
data or ratios support your decision to buy this bond or not?