Financial Management – Homework Set 2
Homework Set #2
Directions: Answer the following questions in a separate document. Explain how you reached the answer or show your work if a mathematical calculation is needed, or both. Submit your assignment using the assignment link above.
You have just won the Strayer Lottery jackpot of $11,000,000. You will be paid in 26 equal annual installments beginning immediately. If you had the money now, you could invest it in an account with a quoted annual interest rate of 9% with monthly compounding of interest. What is the present value of the payments you will receive?
In your own words and using various bond websites, locate one of each of the following bond ratings: AAA, BBB, CCC, and D. Describe the differences between the bond ratings. Identify the strengths and weaknesses of each rating.
Grading for this assignment will be based on answer quality, logic/organization of the paper, and language and writing skills.
NAME: HOMEWORK SET #2
DESCRIPTION: GRADING FOR THIS ASSIGNMENT WILL BE BASED ON ANSWER QUALITY, LOGIC/ORGANIZATION OF THE PAPER, AND LANGUAGE AND WRITING SKILLS, USING THE FOLLOWING RUBRIC.
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Unacceptable Fair Proficient Exemplary 1. You have just won the Strayer Lottery jackpot of $11,000,000. You will be paid in 26 equal annual installments beginning immediately. If you had the money now, you could invest it in an account with a quoted annual interest rate of 9% with monthly compounding of interest. What is the present value of the payments you will receive?
Points Range: 0 (0%) – 23.29 (31.05%)
Did not submit or incompletely calculated the present value of the payments that would be received.
Points Range: 23.62 (31.5%) – 26.66 (35.55%)
Partially calculated the present value of the payments that would be received.
Points Range: 27 (36%) – 30.04 (40.05%)
Satisfactorily calculated the present value of the payments that would be received.
Points Range: 30.38 (40.5%) – 33.75 (45%)
Thoroughly calculated the present value of the payments that would be received.
2. In your own words and using various bond websites, please locate one of each of the following bond ratings: AAA, BBB, CCC, and D. Please describe the differences between the bond ratings. Identify the strengths and weaknesses of each rating.
Points Range: 0 (0%) – 23.29 (31.05%)
Did not submit or incompletely located one of the following bond ratings: AAA, BBB, CCC, and D. Did not submit or incompletely described the differences between the bond ratings. Did not submit of incompletely identified the strengths and weaknesses of each rating.
Points Range: 23.62 (31.5%) – 26.66 (35.55%)
Partially located one of the following bond ratings: AAA, BBB, CCC, and D. Did not submit or incompletely described the differences between the bond ratings. Partially identified the strengths and weaknesses of each rating.
Points Range: 27 (36%) – 30.04 (40.05%)
Satisfactorily located one of the following bond ratings: AAA, BBB, CCC, and D. Did not submit or incompletely described the differences between the bond ratings. Satisfactorily identified the strengths and weaknesses of each rating.
Points Range: 30.38 (40.5%) – 33.75 (45%)
Thoroughly located one of the following bond ratings: AAA, BBB, CCC, and D. Did not submit or incompletely described the differences between the bond ratings. Thoroughly identified the strengths and weaknesses of each rating.
3. Clarity, writing mechanics, and formatting requirements
Points Range: 0 (0%) – 5.18 (6.9%)
More than 6 errors present
Points Range: 5.25 (7%) – 5.92 (7.9%)
5-6 errors present
Points Range: 6 (8%) – 6.68 (8.9%)
3-4 errors present
Points Range: 6.75 (9%) – 7.5 (10%)
0-2 errors present
Solution Preview
Bonds
Q2
Letters A to D are used in poor and standard rating. The best rating is AAA and the least rating is D. AAA being the highest rating is referred to as investments while D which are high yields are referred to as non-investments or low grade bonds.
(318 words)