Question

Select a company in which you are interested and identify a debt instrument issued by this company by reviewing the Wall Street Journal Online or Yahoo Finance. Describe various components of the bond, such as current price, term to maturity, coupon rate, and par value. Calculate the current yield of the bond based on the information you have identified.

I would like the company to be amazon, please. Could you help me figure out the current price, term to maturity, coupon rate, par value, and then the current yield of the bond for amazon.

Answer 1

Answer of the above question is given below

A bond's coupon rate is equal to its yield to maturity if its purchase price is equal to its par value. The par value of a bond is its face value, or the stated value of the bond at the time of issuance, as determined by the issuing entity. Most bonds have par values of $100 or $1,000.

The par value of a bond does not dictate its market price, however. Instead, the market or selling price of a bond is influenced by a number of factors in addition to its par. These factors include the bond's coupon rate, maturity date, prevailing interest rates and the availability of more lucrative bonds.

The coupon rate of a bond is its interest rate, or the amount of money it pays the bondholder each year, expressed as a percentage of its par value. A bond with a $1,000 par value and coupon rate of 5% pays $50 in interest each year until maturity.

Suppose you purchase an IBM Corp. bond with a $1,000 face value, and it is issued with semi-annual payments of $10. To calculate the bond's coupon rate, divide the total annual interest payments by the face value. In this case, the total annual interest payment equals $10 x 2 = $20. The annual coupon rate for IBM bond is therefore equal to $20 ÷ $1000 = 2%.

The coupons are fixed; no matter what price the bond trades for, the interest payments always equal $20 per year. So if interest rates went up, driving down the price of IBM's bond to $980, the 2% coupon on the bond will remain unchanged.

Amazon's

Current share price - 3363.71USD

Term to maturity - 08/22/2027

Coupon rate -  

Amazon sold $10 billion of bonds on Monday, its first time tapping the market since 2018. The tech giant's new bonds will mature between three and 40 years and bear coupons between 0.4% and 2.7%. The last time Amazon sold debt, its 40-year bonds came with a 4.25% coupon.

Par value -

Par Value of Stocks

For example, the par value for shares of Apple (AAPL) is $0.000015 and the par value for Amazon (AMZN) stock is $0.01. 6 Shares cannot be sold below this value upon initial public offering—this way, investors are confident that no one is receiving a favorable price treatment.

Current yield of the bond -

Amazon raised $10 billion in the bond markets, including $1 billion of debt yielding just 0.4% — reportedly the lowest rate in the history of US corporate bonds (AMZN) Amazon raised $10 billion in corporate debt markets Monday, including a $1 billion bond yielding just 0.4%.