Discussion and Assignment Week 3

Question Description

Prepare a Discussion Post:

Describe two to three macroeconomic factors that influence interest rates in general. Explain the effects of each factor on interest rates.
Now think about the industry in which you are employed or one in which you have past experience. To what macroeconomic factors is your industry most sensitive?
Describe two contemporary factors that seem to be impacting your industry today, and identify their impacts on the interest rates experienced within your chosen industry.

General Guidance on Application Length: Your discussion will typically 2-3 paragraphs in length.

ASSIGNMENT

For this Assignment, review the information presented in Problem 7-18 on page 267 of your course text. You will utilize the information in this week’s readings and media to make a recommendation with regard to when to call a bond.

Prepare a spreadsheet using Excel or a similar program in which you compute the items listed in parts a, b, and d. Be sure to compute the Yield-to-Maturity (YTM) and Yield-to-Call (YTC) for each of years 5, 6, 7, 8, and 9.
Utilizing Word, prepare a written report to your finance director:
- Include a detailed explanation of the conclusion you reached concerning whether or not to call the bond before maturity.
- If your recommendation is to call the bond early, explain when to call the bond and your rationale.
- Discuss the advantages and disadvantages of using a long-term loan instead of a bond.

General Guidance on Application Length: Your Assignment, will typically be 2–3 pages in length as a general expectation/estimate for each bullet point.

REFERENCES

Brigham, E. F. , & Houston, J. F. (2019). Fundamentals of financial management (15th ed.). Boston, MA: Cengage Learning.

Chapter 6, “Interest Rates” (pp. 121-227)

Chapter 7, “Bonds and Their Valuation” (pp. 228-269)

Teach Excel. (2012). Bond pricing calculations for simple bonds: Future value, present value, interest rate, etc. Retrieved from http://www.teachexcel.com/excel-tutorials/t-22,bon…

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