Lecture 9

Lecture 9 - FIN 311 Instructor Syed Walid Reza Lecture 9...

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FIN 311 Instructor: Syed Walid Reza Lecture 9 Spring 2016
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Today Exam 1: Do’s and don’ts Chapter 7 What is a bond? Bond features Bond valuation 2
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Bond A bond is a contract between two parties: one is the investor and the other is a company or a government agency Examples: Corporate bonds Treasury notes and bonds War bonds Municipal bonds 3
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Bond 4 You are the investor  you give $$$ to Uncle Sam
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Bond Features Three very important and common characteristics: The face (par) value The principal amount that is repaid at the …. of term Coupon interest rate The interest payment divided by the face value Maturity The specified date when the face value is due 5
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Bond Features You lend money to the borrower AND You will get back your original investment plus interest The interest is determined by the coupon interest rate Sounds very similar to ….. in Chapter 6?
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