Skip to content

DeliverableLengthWorddocument of 700–1,000 words with att

    DeliverableLength:Worddocument of 700–1,000 words with attached Excel Spreadsheet showingcalculations. To document this paper with in-text citations, credit sources and a list of references (3 minimum) used in proper APA Format.After engaging in a dialogue with your colleagues on valuation,you will now be given an opportunity to apply principles that were presented inthis phase. Using a Web site that provides current stock and bond pricing andyield information, complete and analyze the tables illustrated below. Yourmentor suggests using a Web site similar to fill out the first table, you will need to select 3 bonds withmaturities between 10 and 20 years with bond ratings of ‘A to AAA,”B to BBB’ and ‘C to CC’ (you may want to use bond screenerat the Web site linked above). All of these bonds will have these values(future values) of $1,000. You will need to use a coupon rate of the bond timesthe face value to calculate the annual coupon payment. You should subtract thematurity date from the current year to determine the time to maturity. The Website should provide you with the yield to maturity and the current quote forthe bond. (Be sure to multiply the bond quote by 10 to get the current marketvalue.) You will then need to indicate whether the bond is currently trading ata discount, premium, or par.BondCompany/RatingFace Value (FV)Coupon RateAnnual Payment (PMT)Time-to Maturity (NPER)Yield-to-Maturity (RATE)Market Value (Quote)Discount, Premium, ParA-Rated$1,000 B-Rated$1,000 C-Rated$1,000 Explain the relationship observed between ratings and yield tomaturity.Explain why the coupon rate and the yield to maturity determinewhy the bonds would trade at a discount, premium, or par.Based on the material you learn in this Phase, what would youexpect to happen to the yield to maturity and market value of the bonds if thetime to maturity was increased or decreased by 5 years? In this step, you have been asked to visit a credible Web sitethat provides detailed information on publicly traded stocks and select 1 thathas at least a 5-year history of paying dividends and 2 of its closestcompetitors. To fill up the first table, you will need to gather informationneeded to calculate the required rate of return for each of the 3 stocks. Youwill need the risk-free rate that you used in Phase 3, the market return iscalculated in Phase 1, and the beta that you should be able to find on the Website.Company5-year Risk-Free Rate ofReturnBeta (β)5-Year Return on Top 500StocksRequired Rate of Return(CAPM)To complete the next table, you will need the most recentdividends paid over the past year for each stock, expected growth rate for thestocks, and the required rate of return you calculated in the previous table.You will also need to compare your results with the current value of each stockand determine whether the model suggests that they are over- or underpriced.CompanyCurrent DividendProjected Growth Rate(next year)Required Rate of Return(CAPM)Estimated Stock Price(Gordon Model)Current Stock PriceOver/Under PricedIn the third table, you will be using the price to earnings ratio(P/E) along with the average expected earnings per share provided by the Website. You will also need to compare your results with the current value of eachstock to determine whether or not the model suggests that the stocks are over-or underpriced.CompanyEstimated Earning (next year)P/E RatioEstimated Stock Price(P/E)Current Stock PriceOver/Under PricedAfter completing the 3 tables, explain your findings and why yourcalculations coincide with the principles related to bonds that were presentedin the Phase. Be sure to address the following:Explain the relationship observed between the required rate ofreturn, growth rate and the dividend paid, and the estimated value of thestock using the Gordon Model.Explain the value and weaknesses of the Gordon model.Explain the how the price-to-earnings model is used to estimatethe value of the stocks.Explain which of the 2 models seemed to be the most accurate inestimating the value of the stocks.Based on the material that you learn in this Phase, what would youexpect to happen to the value of the stock if the growth rate, dividends,required rate of return, or the estimated earnings per share were to increaseor decrease? Be sure to explain each case separately. Note: You can find information about the top 500 stocks at this Web site.ReferencesS&P500 index chart. (2014). Retrieved from the Yahoo! Finance Web site:^gspc;range=1y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;Yahoo!Finance. (n.d.). Retrieved from sure to document your paper with in-textcitations, credible sources, and a list of references used in proper APAformat.Objective:Apply the time value of money in makingfinancial decisions.Determine the relationship between risk andreturn by calculating stock and portfolio variance.Apply valuation formulas to assess the value ofstocks and bonds.Use effective communication, team andproblem-solving skills to collaborate on a project.

    You can hire someone to answer this question! Yes, has paper writers, dedicated to completing research and summaries, critical thinking tasks, essays, coursework, and other homework tasks. Its fast and safe.