This website uses cookies to ensure you have the best experience. Learn more

Yield Curve: A Study Essay

3331 words - 14 pages

Corporate Study about
Factors affecting the
Yield Curve and
Investment Decisions

Submitted by:
Siguenza, Kevin Loyd G.
Balingasa, Mirasol M.
Francisco, Jetty P.
Miral, Julius Emer D.
Ventura, Ma. Iris Angela T.

Submitted to:
Prof. Pabayos

I. Introduction
The financial market in the Philippines has been in a “rosy” state. It’s a good sign for the country’s economy, specifically the Philippines debt market. The proponents of the study have chosen matured or redeemed bonds of a Real Estate Corporations, namely Ayala Land Inc. and Filinvest Land Inc. According to CBRE Philippines, the leading real estate advisor in the Philippines, that real estate market in the ...view middle of the document...

Ayala Land was spun-off by Ayala Corporation in 1988 to enhance management focus on Ayala Corporation’s existing real estate business and to highlight the value of assets, management and capital structure of the real estate business. The SEC issued Ayala Land its certificate of incorporation on June 30, 1988. The Ayala Land shares were offered to the public in an initial public offering (“IPO”) of primary and secondary shares in 1991 and subsequently listed on the Makati and Manila Stock Exchanges (predecessors of the PSE). The IPO diluted Ayala Corporation’s effective interest in Ayala Land to 88.2%. Since then, Ayala Corporation’s effective interest has been further reduced to about 52.92% as of March 31, 2008 through, among others, the exercise of stock options by the respective employees of Ayala Corporation and Ayala Land, exchanges under Bonds due 1996 and Bonds due 2001, disposal of Ayala Land shares by Ayala Corporation and Ayala Land’s issuance of new shares in relation to its acquisition of interest in companies owning properties in Canlubang, Laguna in 1993. Further reduction of Ayala Corporation’s equity in Ayala Land has also been effected by the conversion to Ayala Land common B shares of the entire =P3 billion convertible Long Term Commercial Paper publicly issued by the Company in December 1994.As of March 31, 2008, equity attributable to equity holders of Ayala Land, Inc. amounted to =P47.6 billion. It is listed on the PSE with a market capitalization of =P140 billion as of March 31, 2008 based on Ayala Land’s common share closing price of =P10.75 as of that date.Ayala Land is the largest real estate conglomerate in the Philippines engaged principally in the planning, development, subdivision and marketing of large-scale communities having a mix of residential, commercial, leisure and other uses. Its principal businesses include planning and development of mixed-use properties, particularly, the subdivision and sale of high-end, middle income and affordable residential lots and housing units, leisure community development, commercial lots and the development industrial and business parks. Ayala Land, through its subsidiaries, also owns hotels and movie theatres, and provides property management and construction services to its own projects and to third parties for industrial building and government infrastructure projects.
The Company’s residential products are distributed to a wide range of clients through various sales groups. Ayala Land established a wholly-owned subsidiary, Ayala Land Sales, Inc. (ALSI), which exclusively markets and sells high-end properties and condominium projects developed by Ayala Land. Separate sales groups have also been formed for certain subsidiaries which cater to different market segments such as Community Innovations, Inc. (middle-income housing) and Avida Land Corporation (affordable housing). To complement these sales groups, Ayala Land and its subsidiaries also tap external brokers. Ayala...

Other Papers Like Yield Curve: a Study

Term Structure of Interest Rate Essay

1800 words - 8 pages bonds which are bonds without coupons (weekly interest rate payments on the bond) which are sold at its face value requiring as a result a fixed interest rate. The yield curve usually indicates that holding long term bonds generates a higher yield in comparison to holding short term assets which are highly liquid e.g. money short term bonds such as bills etc. This previous statement is demonstrated by the typical yield curve (fig1) which slopes

An Overview of Corporate Finance and the Financial Environment Mini Case

3538 words - 15 pages interest rates? What is a yield curve? Answer: The term structure of interest rates is the relationship between interest rates, or yields, and maturities of securities. When this relationship is graphed, the resulting curve is called a yield curve. r. Suppose most investors expect the inflation rate to be 5 percent next year, 6 percent the following year, and 8 percent thereafter. The real risk-free rate is 3 percent. The maturity

How a Goods' Price Is Determined

1237 words - 5 pages other factors which influence demand that one should consider for example if a validated study was published by the Government making the claim that boxes of chocolate would make you rich. Naturally, the demand for boxes of chocolate would increase. The effect of this shift is shown in graph 1.2 below. The effect is to shift the demand curve to the right – where point D1 indicates the demand curve prior to the publication of the study and D2

Beatrice Peabody Case Answers

1017 words - 5 pages *(3)+.2*(4)+.2*(5)=3 years *4=12 Pmt=.845 Rate=9.76/4 Plug into calculator and the price is $83.58 7:A) The coupon rates varying so widely could be caused by a number of reasons. The upward sloping yield curve is a possible solution as well as the declining interest rates over time. They are also all issued across different time so change in the amount of risk may have occurred as well. B) 8 Year= 899.09, this is selling at a discount

Finanacial

1720 words - 7 pages Curve: The yield curve is a graphical representation of the relationship between the maturity of a loan and the interest rate charged on that loan. Here are some examples: This is known as the upward or normal yield curve. The interest rates increase as the maturity or life of the loan increases. That is, if you borrow for five years you end up paying a higher interest rate than borrowing for a shorter period such as two years. Also note

Bonds Evaluation

2198 words - 9 pages investor equals the security’s market value ( price ) would the investor’s required rate of return equal the security’s market yield. The Yield Curve Interest rates that are offered on investments ( or charged by banks on loans ) depends on the horizon ( or term ) of the investment or loan. The relationship between the investment term and the interest rate is called the term structure of interest rates. This relationship can be plotted on a

The Math Behind Six Sigma

1273 words - 6 pages features of 100 "identical" parts and plot the values relative to frequency, you would be plotting a histogram. For stable processes, the curve would most likely be a normal, or bell-shaped, curve. The analysis of the data in this fashion is called descriptive statistics. Data about the entire population is not usually studied. It is more useful to study a sample of that population and infer from the analysis what the entire population most likely

Macro Study Guide

645 words - 3 pages Figure 1.1.) A. B. C. D. Figure 1.8 suggests that The law of increasing opportunity cost does not apply. Resources can be perfectly adapted between study time and grade point average. The relationship between study time and grade point average is first linear, then nonlinear. The relationship between study time and grade point average is constant. Refer to Figure 1.8. If the university decides to lower grading

Article I Want

5460 words - 22 pages to the time to maturity for any class of similar-risk securities. The graphic presentation of this relationship is the yield curve. 3. For a given class of securities, the slope of the curve reflects an expectation about the movement of interest rates over time. The most commonly used class of securities is U.S. Treasury securities. a. Downward sloping: Long-term borrowing costs are lower than short-term borrowing costs. b. Upward sloping

Ecn101

3990 words - 16 pages Definition of Economics Microeconomics vs. Macroeconomics Positive vs. normative economics Economics as a science Scarcity and wants Opportunity cost. Production Possibility Frontiers Factors of Production 2. Demand, Utility and Supply Demand - price and income Distinction between a movement along and a shift of the demand curve Elasticity of demand Inferior and griffen goods Supply

An Analysis of International Finance Issues & Vodafone

4021 words - 17 pages UK yield curve with consideration to Vodafone and their future financing expectations; * Discuss the nature of Vodafone’s exposure to foreign currencies; * Identify and discuss the strategies employed by Vodafone to limit their exposure to foreign exchange risks 3.0 Company Profile Vodafone are one of the largest mobile telecommunication companies in the world and provide a service in a number of locations globally. They describe

Related Essays

Yield Curve Essay

1797 words - 8 pages explains the stylized fact about a normal yield curve. However, because the supply and demand of the two markets are still independent, this theory fails to explain the stylized fact that yields of different terms move together.In an empirical study, Alexandra E. MacKay, Eliezer Z. Prisman, and Yisong S. Tian found segmentation in the market for Canadian government bonds, and attributed it to differential taxation in 2000.C. Liquidity preference

Biology: Separation Of Proteins Essay

1284 words - 6 pages absorbance of 0.078, 0.143, 0.393, 0.473, and 0.527 at the protein’s respective concentrations of 0.28, 0.56, 0.84, 1.12, and 1.40 mg/mL. When a best-fit line was applied to the standard curve, and the absorbance of our unknown concentration (0.317 A) plotted, we estimated a concentration of around 0.84 mg/mL of protein. Our calculations indicated a quantity of 168 mg of protein, which was an approximately 8.96% yield of the projected 1875

Money Essay

600 words - 3 pages interest rate since it has more liquid than bonds. Explain how an economist could use the slope of the yield curve to analyze the probability that a recession will occur and why the spread may matter. The yield curve displays what interest rates represent compared to the maturity. Usually the yield curve is upward sloping since the longer you invest your money, the higher your return should be. However, if the slope is negative, this is an

Financial Essay

2261 words - 10 pages coupon values and the yield spread is a measure of the annualized carry from buying the defaultable bond and shorting the Treasury. INTERPOLATED SPREAD: To overcome the issue of the maturity mismatch in the yield spread above, it is possible to use a benchmark yield where the correct maturity yield has been interpolated off the appropriate reference curve. Rather than choose a specific reference benchmark bond, the idea is to use a reference