Bond price fluctuation

[chengtsai]

Hello,

Thanks for so many updates since the release of 6.0.0

I just played 6.0.6 and things are getting better...
but I noticed my company's bond price fluctuated too much in a short amount of time.

I started out with $5 million, by just playing and investing in the stock market and bond market.
1st year I net profit $53 millions and the second year I net profit $4804 millions.
Too easy to make quick monies especially through the bond market.

Let me give you an example,
On November 1, 2001, I issued
27,700,000 @$100 on 9.45% for 2 years maturity
27,700,000 @$100 on 9.40% for 4 years maturity
27,700,000 @$100 on 9.35% for 5 years maturity

and 2 months later
my bond prices dropped so much without any particular reason (bond rating went from BBB to D)
27,700,000 @$60.17 on 17.57% for 2 years maturity
27,700,000 @$71.90 on 16.71% for 4 years maturity
27,700,000 @$90.08 on 14.84% for 5 years maturity

Based on the above information, I was able to net profit

27,700,000 (100-60.17) + 27,700,000 (100-71.90) + 27,700,000 (100-90.08) =
27,700,000 (39.83) + 27,700,000 (28.10) + 27,700,000 (9.92) = 27,700,000 (77.82) or
1,103,291,000 + 778,370,000 + 274,784,400 = 2,155,614,000 profits (excluding bond interest expense) in two months period
basically 77/300 = 25.66% return in two months by simply issue bonds and repurchase them.

Please see attachments
https://photos.app.goo.gl/gsg6vLSq4QeVvdHr6
https://photos.app.goo.gl/KUBAZX4xj9qfVvBH9
https://photos.app.goo.gl/oCTM7rhP35wc3XrQ7
https://photos.app.goo.gl/LbBqTWi6Jmau9T5R6

[David]

It is possible that your corporation has done something that led to a massive downgrade of its credit rating, thus causing a plunge in the bond price.

[chengtsai]

Here is my saved game for this problem

[chengtsai]

As you can see from my save game.

I have no stores, no productions, or anything in my first two years.
Nothing significant will impact my credit rating from the operation perspective.
My operating profit/lost was Zero.

Three things can go wrong to cause the bond price to drop so much in a short period of time:
1. Credit rating mechanism has a problem, and I don't have knowledge on how this is done, so I can't comment on this.
2. Credit ratings got updated on monthly basis instead on daily, this can cause major discrepancy and make credit rating to differ by a lot.
3. There is a discrepancy between the income statement and balance sheet to cause the credit rating to give wrong evaluation.

I will investigate further on part 2 and part 3.

[chengtsai]

More on part 2, Credit ratings got updated on monthly basis instead on daily, this can cause major discrepancy and make credit rating to differ by a lot.

From my attachments,

you can see on Dec 31 2001, my credit rating is D Coupon rate 17.70% for 5 years Term
and on Jan 1, 2002, my credit rating is BBB Coupon rate 9.85% for 5 years Term.

I done nothing to cause this issue, I only forward the game by 1 day.

https://photos.app.goo.gl/UTYYszMKTfkVuLDt8
https://photos.app.goo.gl/qxseQmMFbmTRv3KL8

Furthermore, the reverse is true to go against my company as I demonstrate here:

On Dec 31 2001, I issued a bond 81,200,000 @100 17.70% 5 years term and few days later
on Jan 4, 2002 this bond become 81,200,000 @139.20 9.85% 5 years term.

If I repurchase this bond back immediately it would cost me:

81,200,000 (100-139.20) = 81,200,000 (-39.20) = lost of 3,183,040,000, again I done NOTHING to cause this to occur.

It gets more interesting,

On Dec 31 2001 screen, the very first day I issued this bond
it showed:
Credit Rating at Issue was D
Current Credit Rating is now BBB, and I haven't even forward a day yet.

So there is definitely a discrepancy.


https://photos.app.goo.gl/Vi2Zozrxb8DAxSuX7
https://photos.app.goo.gl/hHKssGGbKmbvuRLf6

[chengtsai]

more on part 3, There is a discrepancy between the income statement and balance sheet to cause the credit rating to give wrong evaluation.

If we look at the Income Statement, you will see I profited
$53,317,530 in 2001 and $4804M in 2002

So the total profit in 2 years should be $53M+$4804M = $4857M (it is calculated wrong)
but this does NOT match with the balance sheet
which indicated I have total equity of $8124M (I know this is correct because it matched the cash I have in hand).

https://photos.app.goo.gl/kJiVFfTBUsdpJYLq5
https://photos.app.goo.gl/kRbLs1Mhx2NEqSkr7
https://photos.app.goo.gl/dfJwbD67UCGtTZyj8

We need to exam the column "Stock and Bond return" from the Income Statement,
there is a bug and it is calculated WRONG
It is better to separate them like:
Stock Return
Bond Return

Furthermore, I argued
my profit in 2001 is $53M (No bond trading in that year, so I know this is correct)
and net profit in 2002 is $8124M - $53M = $8071M (vs $4804M recorded, and here is the discrepancy).

[David]

We need to exam the column "Stock and Bond return" from the Income Statement,

The dev team is going to separate the "Stock and Bond return" account into 3 accounts, namely "Bond interests", "Bond return", and "Stock Return".

The related post:
https://www.enlight.com/forum/viewtopic.php?f=52&t=6905

After this improvement has been implemented, you may test it again and it will be easier to identify what goes wrong.

[chengtsai]

bond prices continued to drop dramatically on 6.0.9
version.

[David]

Please download the latest version v6.0.10 from https://www.enlight.com/forum/viewtopic.php?f=52&t=6904

[chengtsai]

I talked about this bug already in the past, I can't believe it still have not been resolved yet.

I loved this game so much but I stopped to play until a lot of bug gets corrected.