Vanilla Bonds and Vanilla Stocks
Length: 800-1,000 words
Understanding how to properly value a vanilla bond (a plain bond) is essential for finance. Using the following: https://www.auctions.zionsdirect.com/ find 3 different funding structures. Describe for each structure: security type, term, and yield. Furthermore, take a look at each of their offering documents, and provide a short description of the information found in the documentation.
• Why do the different types of bonds get different rates? Explain your answer.
• What makes each of the different structures different? Explain your answer.
• What does the rate given say about the credit rating for each issuer? Explain your answer.
• How does credit rating affect the rate given to the issuer? Explain your answer.
• Which structure has the best credit rating based on the yield given to each structure? Explain your answer.
• What is the credit rating supposed to tell you? Explain your answer.
• Which bond is receiving the best price? Explain your answer.
• Why does having a good credit rating matter to the issuer? Explain your answer.