Determine the yield to maturity on the bonds

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Reference no: EM13198082

Research online trading sites and DRIPS as outlined below, and summarize your findings. Make sure to include a summary table of the relevant information.

1. Search three online trading sites, and determine the requirements for trading, including the price per trade. Compare and contrast the online trading companies.

2. Search the Web for three companies (look for investor information) that offer DIPs or DRIPs.

3. Compare and contrast the requirements, including minimum investments, nature of the return, costs, and other features.

Part B: Research Market Data on Bonds

Research the current (within the last two months) market data on bonds from AT&T, Dell, and IBM. Assume each bond has a par value of $1000, unless otherwise indicated. Cite your sources.

Required:

1. Complete the table above.

2. Calculate the value of the bond if your required return is 5% on AT&T, 6.5% on Dell, and 8% on IBM.

3. Determine the yield to maturity (YTM) on the bonds given the current price. Based on each bond's ratings and your determination of its yield to maturity, explain how you rank each bond for risk and return.

1. Stock. What is the value of a stock with a
a. $2.50 dividend just paid and an 8% required return with 0% growth?
b. $3 dividend just paid and a 8% required return with 2% growth?
c. $7 dividend to be paid and a 10% required return with 2% growth?

2. Stock. What is the required rate of return on a stock with a
a. $2.50 expected dividend and a $19 price with 6% growth?
b. $2.75 expected dividend and a $20 price with 8% growth?
c. $2.50 expected dividend and a $19 price with 9% growth?

3. Stock. What is the growth rate of the stock with a
a. $3.00 expected dividend and a $20.60 price with 15% required return?
b. $2.40 expected dividend and a $25.35 price with 10% required return?
c. $2 expected dividend and a $8.30 price with 11% required return?

Reference no: EM13198082

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