1) This document provides information and instructions for a coursework assignment for an MSc Finance and Investments module on Equity and Fixed Income Investment. 2) The assignment consists of 3 questions worth varying percentages of the total grade and must be submitted electronically by the due date while adhering to formatting and referencing guidelines. 3) The questions involve pricing a corporate bond, analyzing a proposed high-coupon bond structure, and evaluating theories of the term structure of interest rates. Grading criteria emphasize demonstration of knowledge, analysis, synthesis, and evaluation.

1. London School
of Business &
Finance (LSBF)
MSc Finance and Investments
Module Equity and Fixed Income Investment
Assignment
Title
Written Coursework Assignment (100%)
Assignment Type Individual Assignment
Word Limit 3,500 (+500 words max allowed)
Weighting 100%
Student Cohort
Issue Date 13th
April 2015
Submission Date 18th
May 2015
Feedback Date
Issued by
(Assessor)
Dr Binam Ghimire
Internal Verifier George Danquah
Plagiarism When submitting work for assessment, students should be aware of the LSBF
guidance and regulations in concerning plagiarism. All submissions should be your
own, original work.
You must submit an electronic copy of your work. Your submission will be
electronically checked.
Harvard
Referencing
The Harvard Referencing System must be used. The Wikipedia website must not
be referenced in your work.
Learning
Outcomes
On successful completion of the module, students should be able to:
On successful completion of the module, students should be able to:
1. Analyse and apply concepts and techniques to the valuation of equity and
fixed income investment
2. Be able to apply models derived from fundamental analysis to valuing
equity and cash flow approach to valuing fixed income investments
3. Identify and critically appraise the impact of the current global financial
environment on equity valuation
4. Perform appropriate valuation analysis of private companies and identify
and critically evaluate the relevance of issues in valuing private and public
companies
5. Critically assess the use of fixed income securities in the investment
process
Grading Criteria Grading criteria is available at the end of this document.

2. 2
Assignment
Q 1 – 35%
The private equity firm has asked you to price a 5 year GBP bullet
bond issue for them, with Price and Yield to Maturity, which might be
issued in order to finance the leveraged buyout.
You have the following set of zero coupon rates from UK Treasury
bonds, a Z-spread for United Utilities Group PLC of 200 bps over UK
Treasuries and a coupon rate of 5% would be appropriate to attract
investors.
You can assume that coupon payments are annual and that you are
pricing on a coupon day (no accrued interest) and you may ignore
basis conventions.
You should make your process and methodology clear with
explanations at each stage.
(hint: You might find it easier to use the PV and RATE functions in Excel)
(35 Marks)
Zero coupon
rate
1 Year 0.43%
2 Year 0.44%
3 Year 0.70%
4 Year 0.80%
5 Year 0.95%

3. 3
Q2 – 50%
Tangential is a AA+ rated company that is looking to issue bonds with
a five year maturity. Their investment bank adviser has suggested
that they issue a Yen 1 billion ‘high’ coupon bond which will be an
attractive investment for Japanese pension funds which must pay
their pension obligations from income.
The investment bank has suggested that a high coupon and
redemption price of 90% of the face value will be a suitable bond
structure. The following information is relevant. The current average
yield on a AA+ bond is 5.7%. The maximum coupon payment could
be 8%.
a) Show the possible cash flows for the bond and estimate the
issue price. You can assume there are no issue costs. (20
marks)
b) Explain and analyse what the investment bank adviser means
if he says that such a bond will allow the investor to convert
capital to income (10 marks)
c) Discuss any significant disadvantages that you would expect in
issuing a high coupon bond (10 marks)
d) If Tangential wishes to pay US dollars and not Japanese Yen,
what can the company do? Illustrate and analyse your answer
with diagrams showing the cash flows (10 marks)
Q 3- 15%
Discuss and critically evaluate three different theories relating to
the term structure of interest rates (15 marks)

4. 4
Guidelines Please read all questions and information provided carefully. Answer should be
made in appropriate length keeping in view the requirement of each question and
total word counts allowed.
In addition, your assignment should demonstrate the following qualities:
A critical appreciation of relevant literature and its use to support argument,
substantiate calculations and other aspects of the assignment.
Taking ownership of the content, being prepared to debate and argue a personal
position, and providing evidence of evaluative skills. A submission made up of
extracts from published sources which is descriptive or simply just theoretical
regurgitation is not acceptable. Your submission must have interpretation and
consideration of the challenges and issues of taking theory into practice.
Logical flow of ideas and treatment; appropriate selection of real world factors
related to the companies under scrutiny.
Evidence of additional personal research, and the ability to analyse material from a
variety of appropriate relevant perspectives.
Presentation, structure, appropriateness of methodology, breaking into section
headings/subheadings, tidiness.
Marks will be awarded for proper referencing and originality of work. Also note that
plagiarism is a serious offence and your submission will be electronically checked.
Your report must be handed in electronically no later than given date of submission.

5. 5
Grading Criteria
Criteria 70%-100% 60-69% 50-59% 0 to 49% Fail
Generic skills:
communication and
presentation.
Comprehensive and
correctly structured
assessment. Style of
writing is very fluent
and develops a
coherent and logical
argument. Excellent
referencing.
Well structured report
which follows
appropriate format but
some aspects of layout
and referencing could
be improved. Style of
writing is fairly fluent.
Good referencing.
Good report in most aspects
but suffers from variations in
quality and the layout
contains some inadequacies.
Style of writing is
satisfactory. Referencing
needs improving.
Very poor report which is
incorrectly structured and
contains major errors and
omissions. Style of writing
lacks coherence and
fluency. Poor referencing.
Knowledge &
Understanding
Demonstrates excellent
knowledge of theory
and provides critical
theoretical
underpinning. Very
good interpretations
and summarising of
main themes.
Wide range of
knowledge
demonstrated and
evidence of good
understanding of the
topic.
Ability to interpret and
summarise succinctly.
Good range of knowledge
demonstrated but
weaknesses in key areas.
Some understanding
displayed of the topic.
Summary and interpretation
are satisfactory.
Very poor range of
knowledge demonstrated
and there are major
weaknesses evident in
interpretation and
understanding.
No clear interpretation of
main themes.
Analysis
Excellent use of
theoretical and
conceptual models to
guide analysis linked
with a critical discussion
of main themes.
Deconstructs the major
themes used in the
argument.
Very good use of the
theoretical and
conceptual models with
good critical discussion
and application.
Good evidence of
deconstruction.
Use of theory and concepts
limited but relevant.
Application could be
improved and there is a
tendency towards
description.
Must provide more evidence
of deconstruction.
Very poor use of theory
and very little application of
concepts.
Very little description with
not much evidence of
analysis.
Synthesis/
Creativity/
Application
Logical presentation of
themes with appropriate
examples being
demonstrated. Very
good demonstration of
synthesis. Models have
been clearly applied to
the argument.
Very good account of
main themes with
sound application.
Good attempt at
applying models to the
argument. .Fairly good
attempt at synthesising
the salient points.
Good account of main
themes with some attempt
at application. Limited
evidence of synthesis.
Very poor account of main
themes with little or no
application. No links
between models and
argument.
Evaluation
Shows clear evidence of
in-depth critical
reflection and
evaluation of the
argument by providing
a robust defence of the
opinions presented in
the assessment.
Shows evidence of
critical reflection and
evaluation and a fairly
cohesive defence of
the argument
Shows some evidence of
critical reflection but could
have been developed.
Shows little or no evidence
of critical reflection and
needs to be much more
developed. There is no
defence of the opinions
presented.