Investment Strategy #3: Bonds Paper

Essay by ibkensterUniversity, Bachelor'sA, March 2007

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In this final research paper of investment strategies, we will examine bonds. "A bond is a contract between the borrowing company (issuer) and the lender (investor) in which the borrower promises to pay a specified amount of interest at the end of each period the bond is outstanding and to repay the principal at the maturity date of the bond contract" (Albrecht, Stice, Stice, & Swain, 2005, p. 538). For this final week our team is given $10,000.00 to invest in either Corporate and/or Municipal bonds.

As previously stated our team goal is to focus on return on investment (ROI). With that in mind we aim to select bonds that are trading at a discount rate and have a bond rating of BBB or better. Since bonds are issued in increments of $1,000.00, our strategy is to select bonds below the issue price. To add to our portfolio's value we will target bonds with a coupon rate of 6% or better.

Sprint Nextel offers a comprehensive range of wireless and wire line communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two robust wireless networks serving 53.1 million customers at the end of 2006; industry-leading mobile data services; instant national and international walkie-talkie capabilities; and an award-winning and global (Yahoo Finance, 2007)a.Name and company stock ticker symbol: Sprint Nextel Corp - Sb.Where the bond is listed: Over the counterc.How Sprint fits within the investment strategy: Sprint fit into our investment portfolio because it falls within the criteria of selling at a discount.

d.Price at purchase: 97.88200 ($978.82)i)Yield: 6.051%ii)Coupon rate: 6%iii)Date to maturity: December 1, 2016iv)Premium/discount: Currently the bond is selling at a discount.

v)Rating: BBBe. Number of bond purchased:...