INVESTMENTS

FIN 334
Guidelines for Corporate Bond Selection Assignment #1
1. You need to select a Corporate Bond that is a Good Faith and Credit
Instrument. This corporate bond should:
a. ot be a Senior bond
b. o pledge of an! assets to bac" the bond !ou select
c. o foreign corporate bonds #thus$ no need to e%aluate foreign
e&change ris"'
d. The designation of the corporate bond being a (ebenture or ote
is the best indicator that !ou are selecting the correct t!pe of bond.
). ot all firms ha%e issued Corporate Bonds *f !ou are interested in a
particular firm$ but it has no Corporate Bonds outstanding$ select another
compan! in the same industr! that does ha%e a corporate bond outstanding.
Your e%aluation of this alternati%e firm and the industr! can be of use in later
assignments.
+. *t is probabl! best to select an S , - .// firm$ but this is not re0uired.
1ots of these firms 2ill ha%e multiple bonds outstanding that 2ill 0ualif! for
this assignment.
3. The bond that !ou select must ha%e at least a t2o !ear maturit!
remaining$ thus at least )3 months are remaining in its life.
.. The bond that !ou select should ha%e been issued at least . !ears ago
#)/1/'$ although there is some fle&ibilit! here for !our selection.
4. The bond rating is important in the e%aluation process for this assignment
but !ou can select either an *n%estment Grade or a Speculati%e Grade #5un"
Bond' bond.