Students should select a company that has issued bonds in the last 3 years so that the information sources can provide sufficient financial data for analysis. The selection is subject to faculty approval: the company and bond chosen should be posted no later than Week 6 to the Q&A Forum where the professor will indicate approval/disapproval of the selection before research should commence.
Post the following:
Your company choice
The security chosen (select an individual bond, not a bond fund)
When that security was issued
The Final Project is made up of several sections, each listed below. Each section should be a minimum of one full page (excluding charts, graphs, etc.).
Papers should be 8-12 written pages in length, 10-point font, and double spaced. The paper should include a cover page, table of contents, introduction, body of the report (Sections 1-5), conclusion, and works cited. Only the introduction, body, and conclusion count towards the page count. Graphs, tables, and appendices should be added when needed, however, these items are not part of the total page count.
Even though this is not a scientific-type writing assignment and is mostly creative in nature, references are still very important. At least three authoritative, outside references are required (anonymous authors or web pages are not acceptable). These should be listed on the last page titled “Works Cited.”
Appropriate citations are required utilizing the APA standard.
All policies are in effect, including the plagiarism policy.
Any questions about this paper may be discussed in the Q&A Forum.
This paper is worth 230 total points and will be graded on quality of research and paper information, use of citations, grammar, and sentence structure.
Introduction: (25 points) Please construct a comprehensive introduction that lays out your project.
Section 1: Company Background: (25 points) This section should include what industry the firm is in, its products, its competitors, and the stated main reason for needing capital (to fund receivables, capacity expansion, retire older debt, etc.). If you can’t find a specific discussion about this, then use your judgment as to why you think the funds were needed and explain your reasoning.
Section 2: Balance Sheets: (25 points) What did the balance sheet look like in the quarter just prior to issuing the bonds? Include both a copy from before the issue and after the issue in an appendix to your paper. From the “Key Financial Ratios” link contained in the Week 2 Lesson, calculate Return on Equity (ROE), one debt ratio, and at least one other ratio of your choice both before and after the bonds were issued, and discuss what the results indicate and why you think they are important to your report.
Section 3: Trends in YTM and Price: (25 points) At what price and yield-to-maturity (YTM) was the initial offering sold? Tabulate the price and YTM of the issue at the end of each calendar quarter for the last six quarters. Then, plot the tabulated values to visualize the trends in YTM and prices. Add a brief discussion about your graph or chart and what the results indicate.
Section 4: Rate of Return: (25 points) If you were one of the original investors in this issue and you had invested $10,000, what would your total return be if you sold the securities at today’s market price? Compute the current duration of the bond and add a brief discussion about your calculations and what the results indicate.
Section 5: WACC: (25 points) Compute the firm’s current Weighted Average Cost of Capital (WACC) assuming the total debt of the firm is in the issue that you analyzed. This means that if the company has more than one debt issue outstanding with a total face value of $X million and your chosen issue involves $Y million, then assume that all $X million is in your issue. This will simplify the calculations without diminishing learning value. Add a brief discussion about your calculations and what the results indicate.
Conclusion: (25 points) Based on your research in Sections 1-5, discuss at least three overall conclusions about this offering. In your conclusion, please recap your analysis so that a reader can draw upon your expertise in order to make an educated investment decision. The conclusion should draw together all that you have researched and analyzed and provide a well-supported investment recommendation.
Overall: Organize your project with a title page, table of contents, and Works Cited page. Clearly label each section and ensure pages are numbered. Show all calculations. If calculations involve more than one or two lines, put them in an appendix and show only the end results in the main paper. Sections should flow smoothly from one to another to ensure continuity. Please edit your report for grammar and spelling, so that it is something of which you can be proud.
The following are the best practices in preparing this paper.
Post your selected company bond choice to the Q&A Forum for approval by your professor early in the course.
Do research early so if any problems occur you have time to fix them.
If you get stuck at any point, pose questions to your instructor or your classmates via the Q&A Forum.
Cover page: Include who the paper was prepared for, who prepared it, and the date.
Table of contents: List the main ideas and sections of your paper and the pages on which they are located. The illustrations should be included separately.
Introduction: Use a header on your paper; this will indicate that you are introducing your paper. This section is not to be concise, but comprehensive so the reader is thoroughly informed as to the purpose, methodology, and presentation of the work following. The purpose of an introduction or opening is to
introduce the subject and why the subject is important;
preview the main ideas and the order in which they will be covered; and
establish a tone of the document.
Include in the introduction a reason for the audience to read the paper. Also, include an overview of what you are going to cover in your paper and the importance of the material. (This should include or introduce the questions you are asked to answer on each assignment.)
Body of your report: Use a header titled with the name of your project (e.g., “The Development of Hotel X—A World Class Resort”). Then proceed to break out the main ideas. State the main ideas, the major points in each idea, and provide evidence. Break out each main idea you will use in the body of your paper. Show some type of division; you can separate sections that are labeled, separate group of paragraphs, or separate headers. You will include the information you found during your research and investigation. Each section of your paper needs to flow into the next to produce continuity throughout the project.
Conclusion & recommendation: In this last part, you will present the overall gist of the material in fewer words than the original. Identify the main ideas and major support points from the body of your report; leave out minor details. Summarize the benefits of the ideas and how they affect the industry in which your chosen company resides. This section is a major section because it reviews all that was previously presented and includes your investment recommendation with justification. This is the section to draw together all that you have researched and analyzed.
Works Cited: All references must be listed according to APA standards. References whose information is not utilized in the work are not to be listed. All references must be cited at least once in the document.
Appendices: Present any charts, graphs, or data that were referenced within the body of the work in an appendix. Longer computations should also be included in an appendix with only the end results shown in the body of your paper.
Additional hints on preparing the best possible project:
Apply a three-step process of writing: plan, write, and complete.
Prepare an outline of your research paper before you go forward.
Complete a first draft and then go back to edit, evaluate, and make any required changes.
Use visual communication to further clarify and support the written part of your report (e.g., graphs, diagrams, photographs, flowcharts, maps, drawings, animation, video clips, pictograms, tables, or Gantt charts).