FIN251 Assignment 2: Fixed Income Securities Case Study Analysis

This assignment solution addresses a FIN251 course assignment focused on fixed income securities, specifically analyzing a case study involving Cromwell Pyrotechnics Ltd (CPL). The solution includes calculations for bond pricing, considering factors like coupon rates, yield to maturity, and underwriting charges. It delves into the characteristics of callable bonds, determining their value, and assessing the impact of embedded options on yield and duration. Furthermore, the assignment explores the concept of Macaulay duration, calculating it for option-free bonds and comparing it to callable bonds. The solution also differentiates between domestic, foreign, and Eurobonds, identifying reasons for issuing such bonds. Overall, the assignment demonstrates an understanding of interest rate markets, bond features, and the application of financial concepts in a real-world scenario, incorporating independent research and critical analysis of the provided case study.