Bond Spreadsheet

Bond SpreadsheetPhase 3 Discussion BoardCheryl PonderColorado Technical University OnlineIntroduction to Corporate FinanceProfessor Richard FendlerFINC 390 – 1204B – 08 Reulters Corporation Bond Spread (Bonds Online, 2012) Rating | 1year | 5year | 10years 15 years | 30 years | AAA | 14 | 40 | 68 N/A | 90 | BB | 195 | 225 | 265 N/A | 285 | CCC (JUNK) | 450 | 495 | 515 N/A | 545 | US Treasury Yield | 4.74 | 4.63 | 4.50 N/A | 4.56 | When we compare the different bonds we must also compare the interest rates and whether they are government bonds which are also known as treasury bonds and another is corporate bonds. Treasury bonds are issued by the United States Treasury Department and come with a guarantee on the investment monetary return. The treasury bonds are normally classified as a low interest rate bond and exempt from state and local taxes. Corporate bonds are a format that corporations can sell debts through a public securities market and exactly the same manner a corporation chooses to sell stock in the corporation. (Brokamp, n.d) Purchasing corporate bonds comes with their own investment risks that the corporation one invests may become insolvent and become unable to pay back the bonds issued, plus the interest accrued on the bonds. The financial impact is the higher interest return on one’s investment, but also comes with added financial risks. High – yielding bonds are also referred to as junk bonds whereby a corporation financial structure and credit fall below the normal investment grade or percentage. (Brokamp, n.d) After you purchase either type bond you must wait out the time span for the bond to mature. This time span will assist the corporation in offering the higher interest rates to the investors. There are a couple reasons why specific bond offer higher interest rates. One reason is based on the credit score ratings of the

References: onds Chart (2012) Retrieved from: http:www.bondsonline.com/TodaysMarket/Corporatebondonline Bonds, Retrieved from: http://www.bonds.com/ratingBrokamp, R. (n.d) Types of Bonds, Retrieved from: http://www.fool.com/bondsGitman, L & Zutter, C (2012) Principles of Managerial Finance (13thed) Retrieved from: Pearson, Boston.MA, Prentice Hall       |