Suppose interest rates for bonds today is 5 for an aaa

Assignment Help Finance Basics

Reference no: EM13477347

Go to the Yahoo Finance Bonds Center.

1. Under: Features / BOND LOOKUP / Find Bonds by Name:

2. Type in the first letter of your last name.

3. Under "Type" Choose one of the "Corp" Bonds.

Assume interest rates for bonds today is 5% for an AAA rated bond. Calculate the price of the bond you have selected relative to the 5%. Is the bond selling at a premium or a discount? Why? Be sure to show how you arrived at your answer. What other factors may influence the value of a bond?

The Corp bond that I have chosen is FEDERAL HOME LN MTG CORP and this company has an AAA rated bond so I am going to assume the interest rates for the bond today is 5% and I will calculate the price of the bond I have selected relative to the 5%.

FEDERAL HOME LN MTG CORP issues bonds that have coupons.

Price: $143.57

Coupon: 6.750

Maturity Date: September 15, 2029

Yield to Maturity: 3.096

Current Yield: 4.701

Fitch Ratings: AAA

Callable: No

Type: CORP

Coupon Payment Frequency: Semi-Annual

First Coupon Date: 15-Mar-2000

Offering Information:

Quantity Available: 250

Minimum Trade QTY: 1

Dated Date: 22-Nov-1999

Settlement Date: 16-Sept-2014

Reference no: EM13477347

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