Can someone help me with this question: describe how Sprint has a "good past record"? On what criteria would that be based? Could others come to other conclusions? While you are correct about the lower risk of bonds, this also means that they tend to have lower returns. How can investors determine if the return is too low?
Here is the topic:
Choose one company from the list of “Most Active Investment Grade Bonds” or “Most Active High Yield Bonds”. Do not choose from “Most Active Convertible Bonds”
In your initial response you should answer the question: If you are an investor who is looking for a bond to invest to, are you going to buy a bond that you chose? You should develop a specific recommendation, with supporting rationale to explain your answer.
In your responses to other students you should answer the question: Would you prefer to buy the bond issued by the company chosen by another student? You should develop a specific recommendation, with supporting rationale to explain your answer.
Here is my post:
Sprint Corps.-Yes, I would buy a bond of the company that I choose due to following reasons;
1. As we know that bond generate regular and fixed returns that is why investment in bond will be a good option.
2. Bond has very low quantum of risk that is why an investor should go for investing in the bond of given company. First priority of investor should be minimization of risk because as high risk may lead to high chances of losses.
3. As choose company has good past record that is why making an investment in the bonds of this company will be a good option.
4. Practically we have seen in past that in case of financial failure of a company investment in common stock lost but in case of bond, investor can claim their invested money from company because bondholders have legal rights to receover their money from company. Thus investment in bond of this company is good option.
Would you prefer to buy the bond issued by the company chosen by another student?
I can prefer to buy the bond issued by the company chosen by another student if that company has good financial position on the date of purchase of bonds. Apart from this I will also check following factors before buying the bonds of this company;
1. I will check past performance of these bonds.
2. I will check profitability & solvency condition of this company with the help of various available ratios.
3. As it is given in the question that another student has choose that company so it is quite possible that company will be sound because that student also checked the financial position & profitability of that company.
4. I will also check the ratings of the bonds of that company because ratings helps in understanding the soundness of the bonds of the company etc.