Barry Bonds is the best baseball player of all time.

Even before people accused him of using steroids, Bonds accomplished things on the baseball field that most can only dream of.

Bonds started his career in the National League in 1986, as a member of the Pittsburg Pirates.

His first four years in the League started slow and his numbers were very average for an every-day MLB player.

From then on out, there was nothing average about Bonds’ career.

Throughout the next 10 years, from 1990-1999, Bonds’ numbers increased dramatically across the board.

He eclipsed 140 hits and 90 walks 8 out of 10 years. The exceptions were the 1994 and ’99 season, in which he only played 112 and 102 games respectively, due to injury. His average on base percentage for those 10 seasons was .432. This means over this 10 year span Bonds got on base over 43% of the time he came to bat. For those of you who don’t know baseball, that is a ridiculous percentage. He also exceeded 100 RBI’s in all 8 of the years he surpassed 140 hits and 90 walks.

Along with getting on base and topping 100 RBI’s on the regular, Bonds could also steal bases and play the field at a high level. From 1990-1999, Bonds stole over 30 bases 6 out of 10 seasons and never committed more than 6 errors in a single season.

Barry Bonds is most-known for his ability to hit home runs.
Hitting more than 25 ten out of ten times and more than 40 three times throughout this 10 year period, Bonds was one of the most prolific home run hitters of his time, even before the steroid accusations started to pile up. Although he was very good at it, hitting home runs clearly wasn’t his only ability. Bonds should be remembered for his overall ability as a baseball player rather than just hitting home runs.

This becomes most apparent when one views his wide variety of end of season awards.

During this 10 year span I’ve been referring to, Bonds finished in the top 5 in MVP voting 7 out of 10 years, winning it...

...BOND PROBLEM SOLUTIONS
1. Six years ago, The Corzine Company sold a 20-year bond issue with a 14 percent annual coupon rate and a 9 percent call premium. Today, Corzine called the bonds. The bonds originally were sold at their face value of $1,000. Compute the realized rate of return for investors who purchased the bonds when they were issued and who surrender them today in exchange for the call price.
PV = 1000; N = 6; PMT = 140; FV = 1090; CPT I/Y
I/Y = 15.02%
2. You just purchased a bond which matures in 5 years. The bond has a face value of $1,000, and has an 8 percent annual coupon. The bond has a current yield of 8.21 percent. What is the bond’s yield to maturity?
CURRENT YIELD = ANNUAL COUPON ( PV
0.0821 = 80 ( PV
PV = 80 ( 0.0821 = 974.42
N = 5; PMT = 80; FV=1000; PV = 974.42 CPT I/Y
I/Y = 8.65%
3. The Dass Company’s bonds have 4 years remaining to maturity. Interest is paid annually; the bonds have a $1,000 par value; and the coupon interest rate is 9 percent. What is the yield to maturity at a current market price of $829? Would you pay $829 for one of these bonds if you thought that the appropriate rate of return was 12 percent?
PV = 829; N = 4; FV = 1000; PMT =90; CPT I/Y
I/Y = 14.99%
YES, IF YOU THOUGHT THE APPROPRIATE RATE WAS 12%, YOUR PV WOULD...

...perpetual bond is currently selling for RS. 95/-. The coupon rate of interest is 13.5%. The approximate discount rate is 15%. The value of the bond and the YTM is:
(a) Rs. 90/- and 14.2% Value is (13.5*15%=90) and YTM is ((13.5/95)*100=14.21%)
(b) Rs. 100/- and 13.5%
(c) Rs. 90 and 15%
(d) Rs. 90/- and 13.5%
902. In 2001, Meridian Ltd. has issued bonds of Rs. 10,000/-each due in 2011 with a 14% per annum coupon rate payable at the end of each year during the life of the bond. If the required rate of interest is 8%, find the present value of the bond. Tick the nearest option.
(a) 10,000
(b) 7302
(c) 2,700
(d) 14,026 (9394.11+4631.93=14026.05)
903. The present market value of an equity share is Rs. 80/-; and the exercisable price of the warrant is Rs. 60/- per share. An investor is holding a warrant entitling him to purchase 50 equity shares. The minimum value of the warrant is:
(a) 1,000/- (80-60=20*50=1000)
(b) 4,000/-
(c) 3,000/-
(d) None of these
904. A bond with a coupon rate of 8% is available at its face value of Rs. 1,000/-. The market rate of return on an instrument with similar risk goes down to 6%. The bond price will become:
(a) 1,000/-
(b) 750/-
(c) 1,333/- (800/6%)
(d) None of these
905. A bond with a coupon rate of 10% is available at Rs. 1,250/-. The face value of the bond is Rs. 1,000/-. The...

...ASSIGNMENT
UDBS
Consider a 10 year bond that has a face value shs 1000, a coupon rate of 6% and pays interest once a year.
(a)Suppose person A bought this bond at par when it was initially issued and sold it 1 year later to person B for shs 1024.What is B’s total return?
Soln
Total return =[ Interest paid +(selling price – buying price)]/buying price
Given; Annual interest paid = coupon rate x par value, coupon rate = 6%, par value =1000.
= 6% x1000
=60 , buying price = 1000, selling price = 1030
,
= [60 + (1030 – 1000 )]/1000
=0.09 or 9%
(b)Suppose B holds the bond for 1 year and sells it to person C for shs 1024.What is B’s total return?
Soln
Given; annual interest paid = 60, buying price = 1030, selling price = 1024
=[60 + (1024 – 1030)]/1030
=0.052 or 5.2%
(c)Assume C holds the bond for 3years.Suppose that at the end of these 3 years market interest rate for bonds similar to this one is 7%
i)What price should C expect to fetch in the market?
VB =INT(1 -1/(1 + rd)n /rd ) + m/(1 +rd )n
Given; INT = 60, rd =7%, n = 5, M = 1000.
= 60(4.1) + 713
=246 + 713...

...BONDSBonds pay fixed coupon (interest) payments at fixed intervals (usually every six months) and pay the par value at maturity.
Par value = $1,000
Coupon = 6.5% or par value per year,
or $65 per year ($32.50 every six months).
Maturity = 28 years (matures in 2032).
Issued by AT&T.
Types of Bonds
Debentures - unsecured bonds.
Subordinated debentures - unsecured “junior” debt.
Mortgage bonds - securedbonds.
Zeros - bonds that pay only par value at maturity; no coupons.
Junk bonds - speculative or below-investment grade bonds; rated BB and below. High-yield bonds.
Eurobonds - bonds denominated in one currency and sold in another country. (Borrowing overseas).
example - suppose Disney decides to sell $1,000 bonds in France. These are U.S. denominated bonds trading in a foreign country. Why do this?
If borrowing rates are lower in France.
To avoid SEC regulations.
The Bond Indenture
The bond contract between the firm and the trustee representing the bondholders.
Lists all of the bond’s features:
coupon, par value, maturity, etc.
Lists restrictive provisions which are designed to protect bondholders.
Describes repayment provisions.
VALUE
Book value: value of an asset as shown on a firm’s balance sheet; historical cost.
Liquidation value: amount that could be...

...Tutorial 2
Q1. Why do most international bonds have high Moody’s or Standard & Poor’s credit ratings?
Credit Rating is a social intermediary service to provide credit information and reference for the community. Credit rating is aim to show the size of a credit default risk the rating object, rating agencies focus on financial conditions and historical data to give the overall valuation of object. Currently, credit rating on the issue of international bonds is the popular investment risk valuation method in the international capital market. Specifically, this is assessed on debt servicing capacity of the issue bonds in a period, its fundamental purpose is to protect the interests of investors. At present, there are about 20 credit rating agencies on the issue of international bonds over the world, Moody, Standard & Poor's are the top 2 institution all over the world. Though they are private institution, but the rating scale and guidelines gradually become recognized as internationally accepted samples with considerable authority.
Credit rating is the ‘traffic permit’ for bond issuer to enter the international bond markets. International bonds with high credit rating mastered the global information dominance and capital allocation rights. The rating will directly affect the level of costs and interest rates of oversea companies, it also can affect the strength of a business...

...In the financial markets, the most common forms of marketable securities are stocks and bonds. Though they have some similarities to each other, they differ greatly in many aspects. Broadly speaking, both financial instruments enable one to invest in corporations, public and/or private, with possible profitable returns in the future.
Stocks (or shares), by definition, are shares of ownership in a company. By purchasing stocks in a company, the investor becomes a part owner, and thereby owns a percentage share of the company’s after tax profits. Stocks/shares have two key characteristics: 1) they can be issued in small denominations: an investor can purchase as many or as few shares in a company as he/ she wants, thereby becoming a stockholder in that company and 2) they are transferable, which allows the investor to sell the stocks that he owns to someone else, generally through a stock exchange. Stockholders, by right of being part owner, have the power to elect the board of directors, and in addition, remove senior level managers or directors, who they feel are performing poorly. Though they are part owners, stockholders have limited liability with regard to any losses that the company may incur. Under all circumstances, any shareholder can only lose as much as he/ she had initially invested to purchase the stock. Stockholders invest in stocks to gain from 1) dividends that the company declares from time to time and 2) appreciation in the trading price of...

...Corporate Bonds, Common stock, and Preferred Stock
Higher return means higher risk. People use excess money to invest in a corporation. It is a good way gain more money than put money into the saving account to get a little interest. Before you invest you should analyze the characteristics of corporate bonds, common stock, and preferred stock; and also be aware of their advantages and disadvantages.
The corporate bonds are issued by corporations. They are used to increase capital for issuing companies. They are usually riskier than treasuries. However, one must always think over who has issued the specific bond and what its rating is. In addition, the interest on corporate bonds is subject to federal, state, and local taxes. Corporate bonds characteristics depend on the specific issuing organizations or institution. For example, secured bonds are asset –backed bonds; they are issued using specific properties or assets as collateral. When the famous company has a default in its firm, the secured bond becomes an unsecured bond (unsecured bond are also known as debenture bonds). They are backed only by the general credit worthless of the issuer. Such as the bonds issued by Freddie Mac or Fannie Mae. “A mortgage bond where the bond is back by a pool of...

...Week 3 Time Value of Money and Valuing Bonds
Chapter 6
55. Amortization with Equal Payments Prepare an amortization schedule for a five-year loan of $36,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. How much interest is paid in the third year?
Answer: $2,108.52
56. Amortization with Equal Principal Payments Rework Problem 55 assuming that the loan agreement calls for a principal reduction of $7,200 every year instead of equal annual payments.
Answer: $1,944.00
57. Calculating Annuity Values Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $20,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $325,000. Third, after he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of $750,000 to his nephew Frodo. He can afford to save $2,000 per month for the next 10 years. If he can earn an 11 percent EAR before he retires and an 8 percent EAR after he retires, how much will he have to save each month in years 11 through 30?
Answer: $2,259.65
58. Calculating Annuity Values After deciding to buy a new car, you can either lease the car or purchase it on a three-year loan. The car you wish to buy costs $28,000. The dealer has a special leasing arrangement...