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IM Chapter 7 Interest Rates and Bond Valuation

IM Chapter 7 Interest Rates and Bond Valuation - Chapter 7...

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Chapter 7 INTEREST RATES AND BOND VALUATION SLIDES 7.1 Key Concepts and Skills 7.2 Chapter Outline 7.3 Bond Definitions 7.4 Present Value of Cash Flows as Rates Change 7.5 Valuing a Discount Bond with Annual Coupons 7.6 Valuing a Premium Bond with Annual Coupons 7.7 Graphical Relationship Between Price and YTM 7.8 Bond Prices: Relationship Between Coupon and Yield 7.9 The Bond Pricing Equation 7.10 Example 7.1 7.11 Interest Rate Risk 7.12 Figure 7.2 7.13 Computing Yield-to-maturity 7.14 YTM with Annual Coupons 7.15 YTM with Semiannual Coupons 7.16 Table 7.1 7.17 Current Yield vs. Yield to Maturity 7.18 Bond Pricing Theorems 7.19 Bond Prices with a Spreadsheet 7.20 Differences Between Debt and Equity 7.21 The Bond Indenture 7.22 Bond Classifications 7.23 Bond Characteristics and Required Returns 7.24 Bond Ratings – Investment Quality 7.25 Bond Ratings – Speculative 7.26 Government Bonds 7.27 Example 7.4 7.28 Zero-Coupon Bonds 7.29 Floating Rate Bonds 7.30 Other Bond Types 7.31 Bond Markets 7.32 Work the Web Example 7.33 Treasury Quotations 7.34 Clean vs. Dirty Prices 7.35 Inflation and Interest Rates 7.36 The Fisher Effect 7.37 Example 7.6 7.38 Term Structure of Interest Rates
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A-77 CHAPTER 7 SLIDES - CONTINUED CHAPTER WEB SITES Section Web Address 7.1 bonds.yahoo.com personal.fidelity.com money.cnn.com/markets/bondcenter www.bankrate.com www.investorguide.com www.federalreserve.gov/releases/h15/data/m/tcm10y.txt 7.2 www.investinginbonds.com www.nasdbondinfo.com www.bondresources.com www.bondmarkets.com www.sec.gov 7.3 www.standardandpoors.com www.moodys.com www.fitchinv.com www.kmv.com www.putblicdebt.treas.gov www.brillig.com/debt_clock www.ny.frb.org 7.4 money.cnn.com www.publicdebt.treas.gov/gsr/gsrlist.hem 7.5 www.nasd.com www.stls.frb.org/fred/files www.publicdebt.treas.gov/of/ofaucrt.htm 7.7 www.bloomberg.com/markets End-of-chapter material www.mhhe.com/edumarketinsight www.bondsonline.com www.stls.frb.org CHAPTER ORGANIZATION 7.1 Bonds and Bond Valuation Bond Features and Prices Bond Values and Yields Interest Rate Risk Finding the Yield to Maturity: More Trial and Error 7.39 Figure 7.6 – Upward Sloping Yield Curve 7.40 Figure 7.6 – Downward Sloping Yield Curve 7.41 Figure 7.7 7.42 Factors Affecting Bond Yields 7.43 Quick Quiz
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CHAPTER 7 A-78 7.2 More on Bond Features Is it Debt or Equity? Long-Term Debt: The Basics The Indenture 7.3 Bond Ratings 7.4 Some Different Types of Bonds Government Bonds Zero Coupon Bonds Floating-Rate Bonds Other Types of Bonds 7.5 Bond Markets How Bonds are Bought and Sold Bond Price Reporting A Note on Bond Price Quotes 7.6 Inflation and Interest Rates Real versus Nominal Rates The Fisher Effect 7.7 Determinants of Bond Yields The Term Structure of Interest Rates Bond Yields and the Yield Curve: Putting It All Together Conclusion 7.8 Summary and Conclusions ANNOTATED CHAPTER OUTLINE Slide 7.1 Key Concepts and Skills Slide 7.2 Chapter Outline 7.1. Bonds and Bond Valuation .A Bond Features and Prices Bonds – long-term IOU’s, usually interest-only loans (interest is paid by the borrower every period with the principal repaid at the end of the loan).
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