Vanilla Stocks and Bonds

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Phase 5 IP Vanilla Stocks and Bonds Part 1 Bonds It has been established that it is crucial to be able to properly value a bond for finance. Two companies have been chosen to represent this action for this document Apple Inc. as well as IBM which are both in the technology sector and have long term debt, have bonds and also stocks available for sale. We are going to determine the length until maturity, the yield to maturity and then also the price of the bond today. While keeping this information in mind we can determine what time value of money illustrates about each bond. A credit rating has been assigned to each company and we can determine which company may be the better investment for the bank as well as the investor. In the…show more content…
Apple currently has 16,958 million dollars of long term debt according to the U.S. Security and Exchange Commission (2013). Next we have International Business Machines (IBM) which is one of the largest computer manufacturers in the world developing mainframes personal and business computers and helped to ignite the computer revolution. Again using Morningstar (2013) it was discovered that IBM had a 3 stars and a rating of AA-. According to the U.S. Security and Exchange Commission (2013) IBM has a long term debt of $26,292 million. Morningstar revealed that their debt ratio is 65.8% which is extremely high. The bond that was chosen to evaluate was thhe Intl Busn Machs 4.0% which also has a maturity date of 30 years. The accrual start date is June 20, 2012 and has the first payment date of December 20 2012 which a conclusion can be made that it has semiannual coupon frequency. Let us look at some more information in a chart as it may be easier to understand. 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

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