AT&T Dell IBM

You are given the following data on bonds from AT&T, Dell, and IBM. Each bond has a par value of $1000.

AT&T Dell IBM

Coupon 6.80 6.50 8.375%
Maturity 05/15/2036 04/15/2038 11/01/2019
Frequency Semiannual Semiannual Semiannual
Rating A A- A+
1 Calculate the value of the bond if your required return is 5 percent on AT&T, 6.5 percent on Dell, and 8 percent on IBM.
2 Determine the yield to maturity (YTM) on the bonds given the following prices.

AT&T Dell IBM
Price $1,060.00 $1,016.57 $1,307.78

3 Based on each bond’s ratings and your determination of its yield to maturity explain how you rank each bond for risk and return.
4 Assume you had $10,000 to invest. How many of each bond would you have? What dollar amount of interest would each bond return on the investment for the next year? What would your percentage return be for the year, that is, your interest payments divided by the total amount invested? You must submit your backup in Excel or other supporting documentation showing how answers were reached.