Principle of Financing

Learning Goal: I’m working on a accounting discussion question and need a sample draft to help me learn.

Investors have a wide variety of possible bonds to add to their portfolios. To view a sample of what is currently available go to the following website; http://fixedincome.fidelity.com/fi/FISearchIndivid… (Note: Fidelity has recently changed their website. It works the same way except that they require you to register now. There is no fee, just an additional step to perform to get to the info!)

Now look under “Individual Bonds”, then “Corporate” and click on “Investment Grade (Secondary).” Fill in the data required in that section. In most fields, simply click “All” to view a large number of bonds (you will definitely want to limit at least one of the selections – the website allows 3000 bonds at a time, and you may want to narrow it further – 1000 or so is manageable). At the bottom, click “Table” and then “See CUSIPs.” (Note: a CUSIP is a number that identifies each individual security.) Take a minute and scroll through these individual bonds and then answer the following questions.

1. What is the longest maturity date in this group of bonds?

2. What is the highest coupon rate bond in this group?

3. What is the highest yield bond in this group? Explain why this bond may have a high yield.