Credit Ratings on Bonds
The Internet provides a wealth of information concerning long-term liabilities, bond ratings, and credit markets. Visit the home page of Bonds-Online at the following Internet address:
www.bonds-online.comInstructions| a. | From the home page perform a Bond Search and select Corporate Bonds. In the Ranges section, select “Aaa/AAA” as both the minimum and maximum rating (this is the highest credit rating a company can receive). Leave all other Range selections blank. Select “no” for each item in the Apply Constraints section. In the Industry Group section, select only “industrials" and leave all other fields blank. Select “find bonds” and identify several companies listed and the current yields of their bonds. | | b. | Perform a second search by selecting “B/B” (or lower) as both the minimum and maximum rating (this is a relatively low credit rating). Again, leave all other Range selections blank and select “no” for each item in the Apply Constraints section. In the Industry Group section, select only "industrials” and leave all other fields blank. Select “find bonds” and identify several companies listed and the current yields of their bonds. | | c. | Compare the yields of the bonds from the search conducted in part a to those conducted in part b. Which search produced bonds with the highest yields? Explain why. |
Internet sites are time and date sensitive. It is the purpose of these exercises to have you explore the Internet. You may need to use the Yahoo! search engine http://www.yahoo.com(or another favorite search engine) to find a company's current Web address. |
