FIN385 Course Project
Objective:
Students should familiarize themselves with bonds and/or preferred stock as an
investment opportunity and as a source of funds. In this assignment students will
determine why a fixed income security may be offered by a firm, what features it must
have in order to be attractive to investors, and what kind of financial results were
achieved as a result. Balance sheet accounts as well as certain ratios are to be
analyzed.
Guidelines:
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Papers should be 10 to 20 pages in length, 10 point font, doublespaced,
including a cover page, table of contents, introduction, body of the report,
summary or conclusion, and works cited.
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Even though this is not a scientifictype writing assignment, and is mostly creative
in nature, references are still very important. At least 6 authoritative, outside
references are required (anonymous authors or web pages are not acceptable).
These should be listed on the last page titled “Works Cited”.
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Appropriate citations are required.
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All DeVry University policies are in effect including the plagiarism policy.
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Papers are due during Week 7 of this course.
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Any questions about this paper may be discussed in the weekly Q&A Discussion
topic.
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This paper is worth 170 total points and will be graded on quality of research
topic, quality of paper information, use of citations, grammar and sentence
structure. A separate “Grading Rubric” is available in Doc Sharing.
Students should pick a company which has issued bonds in the last 3 years so that the
internet can provide sufficient financial data for analysis. The report is due by the end of
week 7, in the Drop Box.
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Course Project
By the end of week one post in the Journal [a] your company choice [b] the security
offered; and [c] when that security was issued. It’s suggested you work on at least one
of each of the remaining sections each week.
The final report is made up of seven sections as follows. Each section should be
approximately one page EXCLUDING charts, graphs, etc.
IMPORTANT When preparing your report, separate the sections with headings as is
done here in this guide.
Milestones
I Week 1 Company background (15 pts.)
This section should include what industry the firm is in, its products, competitors, and
the stated main reason for needing capital [to fund receivables, capacity expansion,
retire older debt, etc.]
II Week 2 Balance Sheets (20 pts.)
What the balance sheet looked like in the quarter just PRIOR to issuing the bonds;
include both a copy from before the issue and AFTER the issue. Calculate AT LEAST 5
of the ratios shown in the Moody’s Bond Rating Chart contained in Lecture Week 2,
both BEFORE, and AFTER the bonds were issued, and discuss why you think they are
important to your report.
III Week 3 Trends in YTM and Price (20 pts.)
At what price and 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.
.
IV Week 4 Purpose of the Offering and Leverage (20 pts.)
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What was the planned use of the funds raised? If you can’t find a specific discussion
about that, then use your judgment as to why you think the funds were needed
and explain your reasoning. Calculate the financial leverage before and after the
offering.
V Week 5 Credit Rating (20 pts.)
What credit rating have the bonds been given by the bond credit
rating services?
Research the criteria each agency uses to determine the rating. Why (or why
not) do you think that recent financial statements justify the rating?
VI Week 5 Rate of Return (30 pts.)
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 duration of the bond and its convexity currently. Add a brief discussion
about your calculations.
VII Week 6
Comparisons (30 pts.)
Identify and compare pre offering EPS and total equity $, to the most current values.
Compute the firm’s current 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, assume that all $X million is in your issue. That will simplify the calculations
without diminishing its learning value. Discuss at least 3 overall conclusions about this
offering as a result of your research.
VIII Week 6
Comments
(15 Pts.)
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Course Project
Please give your opinion about the value of this project to your overall learning
experience in this course. Constructive comments, both positive & negative, are
appreciated. Discuss at least two (2) characteristics about this project.
Week 7 Edit
Use week 7 to edit your prior draft and make final additions.
Best Practices
Plan ahead using the suggested milestones.
Do research early so if any problems occur you have time to fix
them.
If you get stuck at any point, ask questions of your instructor and/or
your classmates.
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Cover Page Include who you prepared the paper for, who prepared, and date.
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Table of Contents List the main ideas and section of your paper and the pages
in which they are located. The illustrations should be included separately.
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Introduction Use a header on your paper. This will indicate you are introducing
your paper.
The purpose of an introduction or opening:
Introduce the subject and why the subject is important.
Preview the main ideas and the order in which they will be covered.
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.)
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Body of Your Report Use a header titled with the name of your project.
Example: “The Development of Hotel X A World Class Resort”. Then proceed to
break out the main ideas. State the main ideas, state major points in each idea,
provide evidence. Break out each main idea you will use in the body of your paper.
Show some type of division like separate sections that are labeled; separate
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Course Project
group of paragraphs; or headers. You would include the information you found
during your research and investigation.
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Summary and Conclusion Summarizing is similar to paraphrasing but presents
the gist of the material in fewer words than the original. An effective summary
identifies the main ideas and major support points from the body of your report.
Minor details are left out. Summarize the benefits of the ideas and how they affect
the tourism industry.
Work Cited Use the citation format as specified in the Syllabus.
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 changes
required.
Use visual communication to further clarify and support the written part of your
report. You could use example graphs, diagrams, photographs, flowcharts, maps,
drawings, animation, video clips, pictograms, tables, and Gantt charts.
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