MODERN PORTFOLIO THEORY
Bond Performance Study
Each student will select a corporate bond (specific company and maturity) and determine its yield to maturity as of April 22, 2016 based on data from the Bloomberg terminal. That bond’s yield to maturity will be compared to the yield to maturity on a U.S. Treasury bill maturing in three months, as of April 22, 2016, as reported at www.federalreserve.gov or in Bloomberg. Students will download key financial statement information from Bloomberg for the company that allows for the calculation of the latest leverage, liquidity, profitability and asset turnover ratios. Students will turn in a written assignment that discusses the company’s financial performance and the company’s bond yield relative to the Treasury bill yield.
The grade will be based on four scores:
(1) the ability of the student to download relevant financial statement information from Bloomberg and use that information to construct metrics of financial performance (M2O1);
(2) the evaluation of the company’s financial performance (FINC-LO4), including measures of liquidity (FINC-LO5);
(3) the ability of the student to relate the company’s financial performance to the corporate bond yield (FINC-LO1; FINC-LO4);
(4) clarity of writing (G1O1).