Describe the three most prominent bond rating systems

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Proposed Bond issue and valuation

The planned expansion into Asian and Latin American markets in the next financial year, would require considerable cash, in this regard Trenz is planning to issue 10-year bonds with a face value of $1000 and coupon rate of 7%. The going market rate for such bonds are 8.125%. Assume that coupon payments will be semi-annual and the company needs to raise $10 million.

You are required to:

Question 1) What are the main differences between the bond markets and share markets?

Question 2) Describe the three most prominent bond rating systems.

Question 3) Define interest rate risk. How can the company manage this risk?

Question 4) Calculate the price of the bonds if they are issued.

Question 5) Determine how many coupon bonds would be required to be issued.

Reference no: EM132582148

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