gitmanJoeh_238702_im10 - PartFour PartFourIncludes Chapter10 Chapter11 BondValuation Chapter12 179Gitman/,NinthEdition Chapter10 BondInvestments.1

gitmanJoeh_238702_im10 - PartFour PartFourIncludes...

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Part Four Investing in Fixed-Income Securities Part Four Includes Chapter 10 Fixed-Income Securities Chapter 11 Bond Valuation Chapter 12 Preferred Stocks and Convertible Securities
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179 Gitman/Joehnk • Fundamentals of Investing,  Ninth Edition Chapter 10 Bond Investments .1 Outline Learning Goals I. Why Invest in Bonds? A) Putting Bond Market Performance in Perspective 1. Historical Returns 2. Bonds versus Stocks B) Exposure to Risk 1. Interest Rate Risk 2. Purchasing Power Risk 3. Business/Financial Risk 4. Liquidity Risk 5. Call Risk Concepts in Review II. Essential Features of Bonds A) Bond Interest and Principal B) Maturity Date C) Principles of Bond Price Behavior D) Call Features—Let the Buyer Beware! E) Sinking Funds F) Secured or Unsecured Debt Concepts in Review
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III. The Market for Debt Securities A) Major Market Segments 1. Treasury Bonds a. Inflation-Protected Securities 2. Agency Bonds 3. Municipal Bonds a. Tax Advantages b. Taxable Equivalent Yields 4. Corporate Bonds B) Specialty Issues 1. Zero-Coupon Bonds 2. Mortgage-Backed Securities 3. Collateralized Mortgage Obligations 4. Asset-Backed Securities 5. Junk Bonds C) A Global View of the Bond Market 1. U.S.-Pay versus Foreign-Pay Bonds a. Dollar-denominated Bonds b. Foreign-pay Bonds Concepts in Review IV. Trading Bonds A) Bond Ratings 1. How Ratings Work 2. What Ratings Mean B) Reading the Quotes 1. Corporate Bond Quotes 2. Government Bond Quotes 3. Quotes on Zero-Coupon Bonds Concepts in Review Summary Putting Your Investment Know-How to the Test Discussion Questions Problems Case Problems 10.1. Max and Heather Develop a Bond Investment Program 10.2. The Case of the Missing Bond Ratings Excel with Spreadsheets
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181 Gitman/Joehnk • Fundamentals of Investing,  Ninth Edition .2 Key Concepts 1. Historical returns in the bond market and comparison to stock returns. 2. Current income and capital gains components of bond returns, including the fixed nature of coupon  payments and inverse relationship between bond returns and interest rates. 3. The types of risks to which bond investors are exposed. Call features may result in the early exercise  of bonds with relatively high coupon payment streams. 4. The basic features of bonds and the principles of bond price behavior, including the impact of coupon payments and bond maturity on the inverse relationship between interest rates and bond prices. 5. The many types of bond vehicles currently available and the wide array of investment objectives they can fulfill. Treasury bonds, agency bonds, municipal bonds, and corporate bonds are examined.
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