Case Analysis -1 Academic Year XXXXXXXXXX Term Spring College/Department of Business Bond Valuation- Case Analysis Andey is working as an investment analyst in M.A. Johns Inc. California office based on his sound academic credentials, which included an MBA from a top ranked university and a CFA designation. At the time of his recruitment he was told that one of his responsibilities would be to conduct educational seminars for current and prospective clients. M.A. Johns Inc. a prestigious investment services firm, with branches in 30 major metropolitan areas, had achieved most of its success due to its excellent client relations and focus on client support. The firm ranked among the very best in terms of the number of successful equity underwriting deals undertaken. Recently, a large utility company had hired it as the leading investment banker for a major corporate bond issue. Since most of its retail customers were more familiar with stock investments, John Sullivan, the branch manager at the California office, asked Andey to prepare and present a seminar outlining the various implications of fixed income investments. "About 60% of our investors are in the 55+ age group, Andey so we should not have much trouble convincing them of the benefits of investing in bonds" remarked John. "However, they may need clarifications regarding various terms and concepts associated with fixed income investing. Your job is to convince them of the relative safety and income potential of corporate bonds" said John. In preparation for the seminar, Andey called up a few of his best clients and queried them regarding their awareness of the risk and return potential associated with corporate bond investments. He realized that apart from a good knowledge about the current level and stability of interest rates and inflation, most customers were not very familiar about the finer aspects of bond investing. Bond features like callability, convertibility, sinking fund provision, bond...
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