Data And Methodology For Research

The first synthetic bond combined noncallable treasury bonds that matured in 2005 with zero coupon treasuries

Bonds require a minimum amount of money to purchase and a minimum length of time to hold on to the bond.

reward — in the form of higher interest — than those who risk their money

| |One reason corporations sell corporate bonds is to help finance their ongoing business activities. |

Bondholders face very little investment risk given UST’s high interest coverage ratio and substantial cash flows, making UST less susceptible to the risk of bankruptcy. One would be concerned about the industry’s decline and the fact that growth is driven primarily by the Price Value Market. UST is positioned as the Premium

The CAT bonds are event-linked securities that pays off on the occurrence of a defined catastrophic The risks of catastrophe are shared among investors and in return they receive a rate of investment. When certain catastrophic event occurs, such as bushfire and flood mentioned above, the investor will loss their investment and the issuer receive the money to cover their loss (Cummins 2008). The ability to access the capital markets is an advantage of the CAT bonds and the bonds are attractive to investors because of the low correlations to financial variables, hence they are valuable for diversification (Litzenberger et al., 1996). Also, Harrington and Niehaus (2003) argue that another important advantage of CAT bonds as a financing mechanism is the low corporate tax costs incurred compared to equity financing and the bonds are subject to less credit risks. However, for CAT bonds, problem exists for the difficulty in determining the price or premium, giving that information regarding catastrophic events may be insufficient in most

What does this tell you about the perceived risk of the bonds in these rating categories?

So if we start to compare the separate bonds that are presented by these two powerhouse companies we can see that they both have a maturity date of 30 years for a face value of $1,000 and the coupon type is fixed. The coupon rate is less than the current interest rate which means a buyer may want to pay less for that bond. However there are some differences such as the issue size of the two bonds. Apple

For restaurants and contract services I chose the 1-year maturity bond of 6.9% as they are short term investments.

When a foreign government is the purchaser they do it in larger amounts. I believe it was estimated that China has the most US bonds even though they sold off more than $1.35 million at the beginning of the year.

Bond’s with collateral will have lower coupon rate as bondholders have claim on collateral no matter what. It provides an asset which lowers default risk. Downside to company is that this collateral cannot be sold as an asset and needs to maintain it.

Introduction. This paper discusses the value of a one-year Cardinal Health bond. The approximate value of such a bond is determined, reflecting knowledge of time value of money, and the bond's value is discussed in relation to the operating statistics of the company. There is also discussion of competitor's similar bonds and the relative value of those compared with the Cardinal bond.

Examples of bond rating agencies include Standard and Poors as well as Moodys. According to the bond credit ratings issued by Standard and Poors, as shown in appendix 1, bonds given an AAA rating have got an almost zero level of credit risk. Nonetheless, bonds rated A and above appear to be safe investments whereas bonds with BBB ratings and below appear as relatively riskier investments.

Comparing each bond’s theoretical yield and price to its actual yield and price, we find that both bonds are underpriced. However, this alone is insufficient to conclude that an arbitrage opportunity exists, since our calculated theoretical prices ignore the effects of liquidity premium. As, in this exercise, we are unable to calculate what the true liquidity premium for each bond should be, we consequently do not have a true price for each bond to compare with and ascertain whether each bond is underpriced (ie. both the theoretical and actual prices may not be the true price). Nonetheless, we have calculated the implied liquidity premium for each bond as the difference between the theoretical yield and actual yield (see Table 1 above).

The report on the nature of the Asset and risk profile for jerry and Jones