Hi everyone, I have this homework to do for Investment & Portfolio (Finance) class, If someone can help me with it please, Thank you

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Hi everyone,

I have this homework to do for Investment & Portfolio (Finance) class,

If someone can help me with it please,

Thank you

Hi everyone, I have this homework to do for Investment & Portfolio (Finance) class, If someone can help me with it please, Thank you
Portfolio Project Part Two Alibaba Group Holdings has issued just under twenty bonds with the majority of them being callable bonds meaning that the bonds can be redeemed before the stated maturity date allowing a company to pay off their debt early (Chen, 2020). The coupon rates of the bonds range from 2.5 to 4.5 representing the annual coupon payments paid by the issuer relative to the bonds face or par value (Chen, 2020). A majority of the bonds are rated A1 by Moody’s meaning these bonds are judged to be upper-medium grade and are subject to low credit risk with 1 ranking in the higher end of its generic rating category (Rating Symbols and Definitions). The yield of a bond relates to its cash flows which consists of coupon payments and return of principal which is returned at the maturity date (Nielsen, 2020). Specifically, the Alibaba callable bond with a maturity date of 12/06/2037 has a coupon rate of 4.00% with a last trade yield of 2.00% on 11/20/2020 trading at $120.21 with the initial price at offering being $99.73. This bond is a senior unsecured note which means that it must be repaid before most of the other debts in the event of bankruptcy making it more secure and earning slightly lower interest rates (Chen, 2020). Based on the present trading date these bonds are liquid and this would be a considered a premium bond because it is trading above its face value meaning that it costs more than the face amount of the bond (Murphy, 2020). As interest rates fall, bond prices rise and oppositely as interest rates rise, bond prices fall (Lioudis, 2020). The interest rate falling during the current trade represents why the bond price increased and is selling at a premium which is not ideal for investors because they risk paying more than the bonds maturity value (Why would someone buy a bond at a premium?, 2020). However, premium bonds typically will pay out a higher interest rate than the overall market representing an overall sense of risk in either way you look at these bonds (Murphy, 2020). The Price/Yield Chart accurately depicts the inverse relationship between bond prices and interest rates. Since 2018, the bond maturing on 12/06/2037 has been increasing in price from a low of $87.39 to a current price of $120.21, while the yield interest rate has been decreasing from 4.90% to a current yield of 2.50% which could indicate in the coming years a trend of upward rising bond prices and lowering yield interest rates. Good discussion … In addition to my current stock investments, purchasing bonds from Alibaba Group Holding Limited would be a good investment and opportunity to diversify my portfolio further. Alibaba has a number of bonds with different ranging yield rates from 0.422 to 4.832, with the majority of rates being a fixed-rate bond which always pays the same level of interest through the entirety of its term (Chen, 2020). Several bonds being offered by Alibaba have maturity dates extending past 2020 into significantly later years such as 2037, 2047, and 2057. With bond maturity dates stretching out this far, there is more room for risk as it is harder to determine bond price increases through this much time. The more quickly maturing bonds are more easily read based upon their trends up until this point, so it’ll likely proceed in the same manner. Ok Additionally, in terms of risk, the bonds are mostly callable meaning the company has the right to purchase the bond after a minimum period of time for the purpose of issuing new bonds with lower interest rates (Harper, 2020). It is important to review the provisions of the bond to ensure compensation for the higher yield (Harper, 2020). With a majority of Alibaba bonds being recently traded and callable this represents liquidity and the company can easily sell the bonds at a higher interest rate and purchase bonds at lower interest rates that have the opportunity to increase in value over time (Bovaird, 2020). In 2016 U.S. Treasury bonds offered a 2.43% ultimate high return while as of 2018 the corporate bond has reached a high of 4.02% showing corporate bonds generally offer stronger returns (Bovaird, 2020). The addition of Alibaba Group Holdings Limited bonds to my portfolio may prove as a wise risky investment for more capital gains being generated in addition to my previously chosen stock options. Typically investors are seeking capital preservation and consistent income when it comes to the motivation for investing in bonds…the potential for additional capital gains is interesting but shouldn’t be the primary factor when considering bond investing.
Hi everyone, I have this homework to do for Investment & Portfolio (Finance) class, If someone can help me with it please, Thank you
Purpose To assess your ability to analyze the effects on risk and return of the inclusion of bonds in a portfolio. Overview This is an individual assignment. The object of this assignment is to examine the features of bonds issued by companies in your portfolio and assess the merits of the inclusion of bonds in your portfolio. Action Items 1. Go to the FINRA – Investor Information – Market Data website (Links to an external site .) to search for bonds issued by any one of your companies. (Choose search and enter the ticker symbol, select BOND to find all outstanding bonds issued by the selected company, and then click on “Go”.) a. What types of debt securities has your company issued ? b. What are the current ratings and yields to maturity for the company’s debt securities? c. What factors do you think explain the yield levels? Choose one of your companies* and answer the following questions: *In the event that none of the companies in your portfolio has any outstanding bonds, please notify your professor for an alternative assignment. 2. Choose any one of the bonds issued by one of the companies in your portfolio and make a case for one of the following. Assume a holding period of three to five years. d. Its substitution for the company’s stock in your portfolio. e. Its addition to your portfolio. f. Its exclusion from your portfolio. 2. Please consider the following definition and discussion of holding -period return: 3. The yield to maturity is the average yi eld over the term of the bond. If a bond is sold before maturity, then its actual yield will probably be different from the yield to maturity. If interest rates rise during the holding period, then the bond’s sale price will be less than the purchase price , decreasing the yield, and if interest rates decrease, then the bond’s sale price will be greater. The holding -period return is the actual yield earned during the holding period. It can be calculated using the same formula for yield to maturity, but the s ale price would be substituted for the par value, and the term would equal the actual holding period. Note that, unlike yield to maturity, the holding -period return cannot be known ahead of time because the sale price of the bond cannot be known before the sale, although it could be estimated. Source: http://thismatter.com/money/bonds/bond -yields.htm 3. Write your analysis in a 2 -3 page paper. 4. By the due date indicated, upload your work.

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