The Value of a Vanilla Bond Coursework Example | Topics and Well Written Essays - 1000 words

The Value of a Vanilla Bond - Coursework Example Between the two companies it has been observed that Microsoft Corp. has the highest credit rating in the country. Due to the volatility of Aon’s operations and lower credit ratings, interest rates are higher, which makes the investment in Microsoft Corp. safer than that in Aon Corp, from an investor’s point of view. The Value of a Vanilla Bond A vanilla bond is a bond that has no underlying features, a fixed rate is implied and the bond is redeemable in full on maturity. In this paper, the vanilla bonds of two companies will be focused on to determine why the price of one company’s bonds differs from the price of the bond of the other company. The companies that are being focused for this paper are Microsoft Corp. and Aon Corp. According to the financial results reported by Microsoft Corp and Aon Corp. the companies had a total of $11.9 billion and $2.9 billion outstanding in debt. This debt component comprised of different loan notes, each with a varying range o f maturity dates, out of them only the loan notes that fulfill the criteria of vanilla bonds will be considered for this paper. To calculate the present value of these bonds, each lone note will have to be dealt with separately. The list of the amount of these loans, their coupon rates, price and their maturity dates is mentioned below, and on its basis the present value of each note will be calculated. ... October 2020 1,000 3.000% 105.7 941.85 2.27 February 2021 500 4.000% --- 459.79 --- June 2039 750 5.200% 122.0 612.653 3.88 October 2040 1,000 4.500% 113.6 835.607 3.73 February 2041 1,000 5.300% --- 805.150 --- TOTAL 10,750 10,043.51 AON CORP: Maturity Date Face Value ($ Millions) Standard Coupon Rate Price Present value ($ Million) yield to maturity September 2015 600 3.50% 105.0 589.609 2.07 September 2020 600 5.00% 112.1 570.808 3.37 September 2040 300 6.25% 124.8 248.854 4.67 TOTAL 1,500 1,409.271 As it can be seen, the bonds held by Aon Corp are generating higher yield to maturity than the bonds held by Microsoft Corp. Even though the time till maturity of the two companies is same for some bonds, still Aon Corp is charged with a higher rate of interest than Microsoft Corp. For the bonds that will mature till the years 2015, 2020 and 2040, the respective yields to maturity for Microsoft and Aon Corp. are 0.64, 2.27 & 3.73 and 2.07, 3.37 & 4.67 respectively. Thus it is obvious t hat the bonds issued to Aon Corp are receiving a better price than that of Microsoft Corp. According to Standard and Poor’s Rating Services and Moody’s Investor Service Inc. the Microsoft Corporate credit rating is AAA and Aaa respectively, whereas that of Aon Corp is BBB+ with a stable outlook and Baa2 with a negative outlook respectively. The increase in Microsoft’s credit ratings ensures lower borrowing costs and easy access to financial options for the company. Microsoft was assigned top rating right after the company made public a $ 2 billion commercial paper program and according to S&P only five U.S non-financial companies hold AAA rating according to their standards (Linnane, 2008). The commercial paper of Microsoft Corp is rated A-1+ by Standard & Poor and P-1 by moody’s.

Marketing plan ( market the city of toronto) Assignment

Marketing plan ( market the city of toronto) - Assignment Example This has the effect of improving on their revenue base. At the same time, companies want to gain global recognition. In essence, this is something, which is rather beneficial when it comes to business (Crouch, 2011). Various cities use different approaches in the course of their marketing. It is imperative to note that the method, which is to be used, is largely dependent on the expansive market. The financial outlay is something, which will influence the methods of advertising and marketing. The first thing, which is rather noteworthy, is to gain an understanding of these international markets. Thorough analysis has to be undertaken before the firm can even think of venturing into these markets. A feasibility study regarding the success of the business has to be done. This is particularly pertinent, as it will serve to point out whether the business will stand a chance of success in the new market. This is as opposed to going blindly into these markets without prior knowledge (Pepal l et al. 2005). The city, which is in perspective, in this case is Toronto. Toronto is a city, which is considered to be rather tech-savvy. At the same time, it is also considered as one of the best cities in North America when it comes to jobs that are related to Information technology. The environment in the city is one, which has attracted several major global firms. These firms have set up offices in the city. These include Xerox and General Motors just to mention a few. These developments put Toronto at a rather significant place when it comes to the developments that are attributed to jobs and employment opportunities. The city is also very flexible in the sense that it easily adapts to the changes that are happening in the world and picking up the latest trends that come by. One of the things, which seem to be rather influential in attracting people into the city, is to do with the good reputation, which the country has on a global platform. It is worth noting that people wil l always want to associate themselves with desirable things. The name and reputation of the city is already established. For this reason, the main thing, which should be focused on, is the development of the industries and institutions, which are existent in the city. For example, the educational institutions ought to be developed and marketed even more. This is because they are the primary institutions, which serve to attract foreign individuals into the city. The museums and art centers that are in the city are also important for attracting tourists into the city. The infrastructure which is in the city is significant and is in a position to support the number of people who might flock the city from foreign countries (Bunting & Filion, 2000). The other issue, which comes into perspective aside from the place, is the price. This price is in relation to the cost of living and that to do with other elements within the city. On average, the cost of living in the city is rather encoura ging (Lee & Lovekin, 2009). This is something, which is even pointed out by the average wage rate in the city. This is in the region of $24 per hour. There is quite a significant stability when looking at the economic condition in Toronto when comparing it to other major cities. The instances of price fluctuations are at a minimal. There is a significant promotion of the city and its associated elements. This is