Your investment department has researched possible investments in corporate debt securities Among the available investments are the following $100 million bond issues, each dated January 1, 2024. Prices were determined by underwriters at different times during the last few weeks. Company 1. BB Corporation 00 Corporation 3. GG Corporation Bond Price $ 109 million $ 100 million $90 million Stated Rate 11% 10% 9% Each of the bond issues matures on December 31, 2043, and pays interest semiannually on June 30 and December 31 For bonds of similar risk and maturity, the market yield at January 1, 2024, is 10%. Most attractive investment Loast attractive investment Required: Other things being equal, which of the bond issues offers the most attractive investment opportunity if it can be purchased at the prices stated? The least attractive? Note: Use tables, Excel, or a financial calculator. (EV.of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and EVAD.of $1)

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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**Corporate Debt Securities Investment Analysis**

Your investment department has researched potential investments in corporate debt securities. Among the available options are the following $100 million bond issues, all dated January 1, 2024. Prices were determined by underwriters at different times during the last few weeks.

| Company       | Bond Price     | Stated Rate |
|---------------|----------------|-------------|
| 1. BB Corporation | $109 million   | 11%         |
| 2. DD Corporation | $100 million   | 12%         |
| 3. GG Corporation | $90 million    | 9%          |

Each bond issue matures on December 31, 2043, and pays interest semiannually on June 30 and December 31. For bonds of similar risk and maturity, the market yield as of January 1, 2024, is 10%.

**Required:**

Other things being equal, which of the bond issues offers the most attractive investment opportunity if it can be purchased at the prices stated? The least attractive?

Note: Use tables, Excel, or a financial calculator to determine the present value and effective yield: (PV of $1, AV of $1, PVA of $1, PVAD of $1).

- **Most attractive investment:**
- **Least attractive investment:**
Transcribed Image Text:**Corporate Debt Securities Investment Analysis** Your investment department has researched potential investments in corporate debt securities. Among the available options are the following $100 million bond issues, all dated January 1, 2024. Prices were determined by underwriters at different times during the last few weeks. | Company | Bond Price | Stated Rate | |---------------|----------------|-------------| | 1. BB Corporation | $109 million | 11% | | 2. DD Corporation | $100 million | 12% | | 3. GG Corporation | $90 million | 9% | Each bond issue matures on December 31, 2043, and pays interest semiannually on June 30 and December 31. For bonds of similar risk and maturity, the market yield as of January 1, 2024, is 10%. **Required:** Other things being equal, which of the bond issues offers the most attractive investment opportunity if it can be purchased at the prices stated? The least attractive? Note: Use tables, Excel, or a financial calculator to determine the present value and effective yield: (PV of $1, AV of $1, PVA of $1, PVAD of $1). - **Most attractive investment:** - **Least attractive investment:**
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