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Project Part 3: Microsoft vs. Apple Bonds
Aniko McClendon
University of Maryland Global Campus
FINC 330-6883 Business Finance
Salma Asif
September 28, 2023
Introduction
Microsoft Corporation’s mission is to provide customers with technology that is consistent to their needs. They offer various products, that includes hardware devices, cloud-
based solutions like Office 365, operating systems, and software applications, which is were their revenue stems from along with online advertising. They are committed to providing excellent products and services to help customers meet their needs, while continuing to enhance their services effectively. The purpose of this project is to help my client invest in bonds and stocks that I think are best, there will be an investigation for the bond and stock performance for Microsoft Corporation and its competitor Apple Corporation, then evaluating both company’s data stock performance for Microsoft for the last 3 years and its competitor Apple for the last year. Recommendations will be made to help the company strategize for the for the future, these suggestions can also help with the financial leverage of the company to increase shareholder wealth, we must consider that Microsoft’s financial health when considering these changes.
Bond Performance
1.
2. For the first bond the last price was 99.65 and for the second bond the last price was 99.79. Assuming that par value of the bond is $1,000, the investor would pay $996.50 for the last
price for first bond. Because $996.50 x 1000/100 = 996.50. For the last price of the second bond,
it came to 997.90. Because 99.7 x 1000/100 = 997.90.
3. Assuming that par value of the bond is $1000. The annual coupon interest payment for the first bond would be 33. Because the coupon rate is 3.300% x 1000 = 33. For the second bond the annual coupon interest payment would be 52. Because the coupon rate is 5.200% x 1000 = 52. In this case to get the annual coupon interest payment you must multiply the coupon rate times 1000.
4. Assuming that par value of the bond is $1000. The current yield of bonds for the first bond shown would be 3.31, to get the answer you must divide the annual coupon interest payment by the last bond price which would be 33/996.5 = 3.31. For the second bond the current yield of bonds would be 5.21, 52/997.90 = 5.21.
5. According to the Business Insider website the YTM for the first bond is 5.03% and for the second bond the YTM was 5.10%
6. a. If I were to buy a bond issued by Microsoft, the bond that I would choose is the second bond and that is because even though it cost a little over a dollar more to purchase compared to the first bond, the second bond has a higher coupon interest payment which came to 52, in comparison to the first bond which was 13 lower, coming in at 33. The current yield of bonds for
the second bond came in higher than the first bond as well by 1.90. And last reason as to why I think the second bond would be the best one to buy is because the YTM was 0.07% percent
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330
0✔
275
✓
1,295 ✔
33,425 ✔
0
10,500
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