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Compute the credit spread of bond

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Reference no: EM132955368

Analyse one of Commonwealth Bank of Bank outstanding bonds.

  • Firstly, compute the credit spread of this bond, by comparing the yield on this bond with the yield on Treasury Bonds of comparable duration. To simplify your calculation of the current required rate of return of the company's bond, assume that the last coupon payment has just been made.
  • Secondly, estimate the bond's price one year from now (assuming that interest rates remain constant), and provide commentary. Finally, provide a credit rating for the firm's bonds, based on your analysis of the company bond, as well as your analysis in Part B of the assignment, and explain why you have given this rating.

Reference no: EM132955368

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