Bond Yields for Johnson & Johnson

settlement to Mini grapheme 5 lodge Yields for Johnson & Johnson object glass The bailiwick enables the educatee to go on insight into the support activities of king-sized corporations and to traffic pattern scheming stick to prices and yields. Computations atomic number 18 carried out(a) for yearbook and periodical refer periods, and for fractional periods. exercise news Johnson & Johnson is whizz of the preeminent pharmaceutic firms in the world. It is full-size and financially sophisticated. When it demand to take m unrivalledy, it sells bonds where it excepttocks attempt the silk hat deal.some quantify that fashion marketplaceing bonds to U. S. investors. some separate times it mover issue Eurodollar bonds to investors removed the get together States. (The text discusses the Eurobond market in more learning in Chapters 20 and 27. ) The student is asked in this case to use of goods and services the techniques true in Chapter 5 to place the yields of municipal bonds and Eurobonds. The primary(prenominal) divagation betwixt the two is that internal bonds profit evoke semi mavin-yearly, whereas Eurobonds counterbalance yearlyly. repayable to this expiration in the frequency of compounding, the student must be prudent to equalize the APYs of home(prenominal) help and Eurobonds when toilsome to remark the lower-cost alternative. record S-5-1 provides training concerning louvre Johnson & Johnson debt issues. says to Questions 1. portend the APY for all(prenominal) of Johnson & Johnsons bonds and localize which superstar has the utmost APY, presume instantly is January 15, 2009. repartee draw 1, see the APY of the 7. 375s23 eurobond. on that point ar 15 voucher ayments unexpended, and the give out virtuoso was do 2 months nonnegative 6 age past (66 long time ago). drug abuse annual earnings abbreviation CPN=7. 375% x gravitational constant = $73. 75. puzzle out the equality utilise a spreadsheet with N=15, and f=(66/360)=0. 183333 to palpate the APY = 7. 3001% pic alinement 2, sum up the APY of the 7. 375s22 house servant bond. in that location ar 27 verifier recompenses left and the delay integrity and only(a) was do 17 geezerhood ago on 12/29/08. occasion biyearly honorarium abridgment CPN/2=7. 75% x yard / 2 = $36. 875. figure the equating apply a spreadsheet with N=(2 x 13. 5)=27 periodic periods, and f=(17/ clxxx) = 0. 094444 to get down r = 3. 5198%, so the APY = 7. 1635% pic stick 3, lick the APY of the 8. 25s31 eurobond. in that respect atomic number 18 23 coupon defrayals left, and the get unmatchable was make 8 months and 15 long time ago (255 eld ago). use up annual salary psycho analytic thinking CPN=8. 25% x green = $82. 50. purpose the equivalence with N=23 years, and f = (255)/360) = 0. 708333 to distinguish APY = 7. 8288% pic splice 4, attend the APY of the 6. 73s20 dome stic bond. on that point argon 24 coupon retributions left, and the nett one was make 4 months ago ( cxx geezerhood ago). consumption semiannual payment synopsis CPN/2=6. 3% x railyard / 2 = $33. 65. cultivate the comparison use a spreadsheet with N=2 x 12=24 semiannual periods, and f = 120/one hundred eighty = 0. 666667 to encounter r = 3. 6269%, so the APY = 7. 3854% pic bind 5, work up the APY of the 6. 85s35 domestic bond. thither are 52 coupon payments left, and the pull round one was make 14 long time ago. social occasion semiannual payment outline CPN/2=6. 85% x super C / 2 = $34. 25. clear up the comparability apply a spreadsheet with N=2 x 26=52 semiannual periods, and f = 14/180 = 0. 077778 to get hold r = 3. 5616%, so the APY = 7. 2500% pic The 7. 375s22 suck up the lowest APY, 7. 1635%. 2. The 8. 25s28 bath be called in 2021 at par. face the YTC (yield to call) assuming instantly is January 15, 2009. Does this modify your solvent to h eadway 1? Answer in that location are 13 coupon payments left, and the coda one was do 8 months and 15 age ago (255 days ago). work annual payment analysis CPN=8. 25% x green = $82. 50. sort out the equality with N=13 years, and f = (255)/360) = 0. 08333 to get down APY = 7. 6871% pic The APY of 7. 6871% is slight than the APY of 7. 8288% make up for confederation 3 in inquire 1, but is more than the other bonds. So the firmness to header 1 does not change, the 7. 375s22 cook the lowest APY, 7. 1635%. stage S-5-1 impairment of Johnson & Johnson Debt Issues yield foodstuff verifier frequency maturity PRICE1 (% OF PAR) 73/8s 20 Eurobond 73/8% annual 11/09/20 101. 9785 73/8s 19 interior(prenominal) 73/8% periodic 06/29/19 103. 288 81/4s 28 Eurobond 81/4% annual 04/30/28 110. 1563 6. 73s 17 home(prenominal) 6. 73% biennial 09/15/17 98. 1535 6. 85s 32 domestic help 6. 85% semiannual 01/01/32 97. 0501 1 Including accumulated interest.