Using Bloomberg, find 2 bonds issued by the same firm with approximately the same maturity date (maximum difference: 1 month) but selling at different prices. (Hint: Most Canadian banks have a large number of bond issues outstanding).

Assignment: Identify the 2 bonds (i.e. tell me the issuing firm, the coupon rates and the maturities), the prices of the 2 bonds, and other relevant features. Then explain why one of the bonds is selling at a higher price.

You may work alone or with 1 other student. If you work with another student, hand in one paper with both your names. You will each receive the same grade.

The assignment is due at the beginning of your class on Feb 10. 2015. It must be submitted on paper (no electronic submission). Late assignments will only be accepted with justifying documentation approved by the Dean’s office.

Note: The heart of the assignment is to explain the price difference between the 2 bonds. Students should not expect to receive significant grades for simply identifying 2 bonds issued by the same firm with appropriate maturity dates. It is recommended that you spend considerable time choosing the two bonds you will compare, so as to find a pair that allows you to best demonstrate your knowledge of bond pricing.

The written explanation should be as long as it needs to be to provide a thorough explanation of why the bond prices differ and no longer. Inclusion of material that does not directly address the question of why the prices of the bonds differ will be taken as a lack of understanding of bond pricing.

The finance lab has been booked for your class during your class time on Feb 5, but you can also use it at any other time it is open and has not been booked for another class. Keep in mind the limited number of Bloomberg terminals. Lab assistants will also be available when the lab is open to answer questions about accessing data on Bloomberg, but they will not help you with the assignment per se.