1. Using the FINRA Bond Center search engine, search for SEC 144A private placement corporate bonds….
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Question “1. Using the FINRA Bond Center search engine, search for SEC 144A private placement corporate bonds….”
1. Using the FINRA Bond Center search engine, search for SEC
144A private placement corporate bonds. Using the advanced search
engine, set sub-product type to “Corporate Bond”, check the box to
“include” 144A Bonds, set the Moody’s rating from C to Caa, the
Standard and Poor’s rating from D to BBB-, and the Trace Grade to
“High Yield”. Click on SHOW RESULTS and sort from highest to lowest
maturity. Display the details for the bond issued by “Chesapeake
Energy Corp”. Make a screen capture of at least the first 10 lines
of the display, and include it below.
2. A 30-year 6% semi-annual coupon bond has a tenor of 14 years
and a yield to maturity of 7.000%. If the PAR value of the bond is
$1000, what is the price of the bond today?
Answer
2.
Coupon Rate = 6% annually = 3% semi-annual bond
Coupon Value = 3% * 1000 = $30
Semi-annual semi-annual semi-annual semi-annual semi-annual semis = 14 years of age = 28 years of maturity = Tenor = Maturity
Semi-annual YTM = 7.5% = 3.5%
Price of the bond = 30/ ((1+0.035) ^ 1) + 30/ ((1+0.035) ^ 2) + 30/ ((1+0.035) ^ 3) + 30/ ((1+0.035) ^ 4) + —————————————- Likewise + 30/ ((1+0.035) ^ 28) + 100/ ((1+0.035) ^ 28) ( Coupon value are discounted at YTM + Par value received at maturity discounted at YTM)
Right side of the equation was a geometric progression. First term = 30/1.035 = 28.99. Ratio,r = 1/11.035 = 0.97. N=28
The bond price is 28.99
Bond price = $ 911.67
Conclusion
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