Priced at 944.17, the barge operator's unsecured notes anchor a GB550 Unit 3 bond valuation that also measures rate risk and what collateral is worth. Searches like "gb 550 unit 3 assignment example", "gb550 unit 3 sample" and "gb550 unit 3 example" land here.
What a finished GB550 Unit 3 bond valuation looks like
The paper runs to about five pages in four parts. Its opening part prices a 1,000-dollar note paying 6.125 percent in semiannual coupons of 30.625, with eight years to maturity, at a 7.05 percent market yield: coupons worth 369.69 plus principal worth 574.48 give 944.17, a current yield of 6.49 percent. Part two reads the 7.05 percent as a 4.35 percent Treasury yield plus a 270-basis-point spread, linked to the Unit 1 coverage of 3.47 times and leverage of 2.68 times EBITDA. Part three moves rates a point either way: the price falls 5.94 percent to 888.05 or rises 6.41 percent to 1,004.70, against a modified duration estimate of 6.17 percent. Part four solves the secured notes, priced at 99.10 with a 5.40 percent coupon and five years left, for a 5.61 percent yield.
How a GB550 Unit 3 example is structured
The valuation starts from the issuer rather than from the formula. The barge operator's debt stack is profiled briefly, 250 million of unsecured notes, 110 million of secured equipment notes and a 60 million bank loan, to explain which instrument is valued and why its yield matters to later units. Pricing follows, with semiannual conventions stated once and the two cash flow streams valued separately. The spread section breaks the yield into a risk-free part and a credit part, then ties the credit part to specific ratios from the groundwork exercise. Rate sensitivity comes next as a small table of three yields and three prices, with duration offered as the estimate and the full repricing as the check. The secured notes close the paper, and a final paragraph states which yield Unit 6 should use as the cost of debt.
Coupons and principal apart
Sixteen coupons of 30.625 are worth 369.69 and the 1,000 at maturity 574.48, which explains why the notes trade below par at 944.17.
A yield in two pieces
The 270-basis-point spread over an eight-year Treasury is tied to coverage of 3.47 times and leverage of 2.68 times EBITDA, the figures a lender reads first.
One point either way
A one-point rise costs 5.94 percent and a one-point fall adds 6.41 percent, an asymmetry the paper attributes to convexity in a single sentence.
Duration's estimate, then the check
Modified duration of 6.17 predicts the rise-case loss within about a quarter of a point, and the paper states where the estimate would drift further.
What the collateral buys
Secured notes priced at 99.10 yield 5.61 percent, 141 basis points over a five-year Treasury, and the gap is credited mainly to the pledged barges, with shorter maturity named as a second cause.
Where marks go in GB550 Unit 3
Graders in this unit tend to look first at whether the yield used is the market's or the coupon's. Discounting the notes at 6.125 percent returns par and hides the question the unit poses. Cash flows set annually when the notes pay twice a year shift the price enough to fail an answer check. A spread quoted without its Treasury benchmark, or against a benchmark of the wrong maturity, cannot support the credit discussion that follows. Rate sensitivity shown in one direction only misses the asymmetry the prompt often asks about. Duration reported without a repricing to test it reads as a formula applied rather than understood. Papers that value the bonds and never say which yield becomes the cost of debt leave Unit 6 to guess, and later units inherit the gap.
Get a GB550 Unit 3 example written to your instructions
Which issuer did your section assign, or which did you choose? Send its bond terms, a recent price or yield, the Unit 3 prompt and the rubric. Every issue gets priced from its two cash flow streams, the yield split into benchmark and spread, and the rate risk measured both ways. That first custom sample is free, usually back in 24-48h.
GB550 Unit 3 questions, answered
Where do bond prices for a real issuer come from?
FINRA publishes trade data for most corporate bonds through its public market data pages, and library databases often carry the same prices with longer history. The sample's issuer is composite, so its prices are illustrative. For your company, the custom version uses a dated price from a source your section accepts and cites it beside the calculation.
Why are secured notes cheaper than unsecured ones?
Because lenders holding a claim on specific assets expect to recover more if the borrower defaults, so they accept a lower yield. Barges hold resale value, which makes them useful collateral. The sample credits most of the 129-basis-point gap between the two spreads to that security and notes that the shorter maturity of the secured notes contributes as well.
Does the course expect duration?
Not always. Some sections stop at pricing and yield to maturity; others ask for a measure of interest rate risk, and duration is the usual one. The sample reports modified duration and then reprices the notes at higher and lower yields so the estimate can be checked. If your prompt does not mention duration, the repricing alone answers the risk question.