Sample Finance Essay Paper on Corporate bond rated AAA by S&P vs. a “junk bond”

Finance

Question one

A corporate bond rated AAA by S&P vs. a “junk bond” will pay higher coupon rate. Notably, the coupon rate is largely dependent on the associated characteristics of the bonds in question. For example, bonds issued to companies (corporate entities) and speculative bonds (junk) are associated with an expanded amount of risks especially on default. These types of bonds are known to attract higher interest rates (coupon rates) compared to other bonds. This is particularly true when the issuer doesn’t default as the higher returns on the yield bond will be recorded. These types of bonds can also be described as ‘higher grade bonds’ given the increased risks on default and the expected returns. In essence, corporate and junk bonds, though risky, have a hypothetical appeal, a fact attributed to the potentially higher coupon yields in cases on non-defaults.               

Question two

  1.  

Face value = $100,000 par value Treasury bill for current market price=$98,000.

$ 100, 000 – $98, 000 =$ 2000/100000= 0.02

Let 360 = number of days in a year

Let days to maturity = 28days

360/28 =12.8571143

Discount yield= 0.02* 12.8571143

The annualized bank discount yield paid by the T-bill = 0.2571%

  •  

The holding period yield = (price at maturity – purchase price + cash distribution at maturity)/ purchase price 

= $ 100, 000 – $ 99, 000 + 0)/ $ 99, 000

= 0.0101 %

Question three

  1.  

The most recent total compensation packages for the head of Oracle (ORCL) = total compensation as at 2014 was $ 67, 261, 251

Head of Microsoft Corp (MSFT) = total compensation as at 2014 was % 84, 308, 755

Head of Disney (DIS) = total compensation as at 2014 was $ 46, 497, 018

Head of Ford Motor Co (F) = total compensation as at 2014 was $ 22, 042, 128   

  1.  

What is the day’s price range for the stock? = 685.05 – 698.00

What price did it last trade at? = 690.03

What is the closing change in the price of the stock, both in dollar and percentage terms? = 7.58(1.11%)

What is the stock’s 52-week price range? = 515.18 – 789.87

Notably, the other information that I find useful is a graph on the previous close of the price of stock of the company.