Book are attached chapter 12
Problem 1:
Many investors rely on a company’s dividend yield as a guide for selecting companies. Read about a popular approach called “Dogs of the Dow” (
http://www.dogsofthedow.com/www.dogsofthedow.com). Click on “YTD Performance” (or choose “YTD Performance” from the drop-down menu) to compare the approach to the overall Dow Jones Industrial Average.
For the current year, are the Dogs of the Dow beating the overall market? Explain your answer.
Problem 2:
Use the following bond screener to answer the questions below:
http://cxa.marketwatch.com/finra/BondCenter/AdvancedScreener.aspxhttp://cxa.marketwatch.com/finra/BondCenter/AdvancedScreener.aspx
Choose “Corporate”, enter the maturity range from 01/01/2022 to 12/31/2032 (i.e., we are looking for a maturity of between 10 and 20 years), enter a coupon rate between 5% and 8%, and a Fitch rating of AAA, search for bonds.
State the issuer’s name, coupon rate, maturity and the yield for the first bond in the search results.
Is the bond callable?
Is the bond selling at a discount, a premium, or at par? Why? What causes a bond to sell at a discount, at a premium or at par?
Given the yield and the date of maturity of the bond, would you invest in this bond until maturity? Consider the current interest rates, expected future interest rates and the term to maturity. Can you get a better yield at the same risk level someplace else?