BUS2020F+-+Bonds+L1

BUS2020F Bonds L1 - BONDS MichaelVermeulen LC5.29 LearningObjectives andazerocouponbond

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Click to edit Master subtitle style  4/7/10 BONDS Michael Vermeulen  LC 5.29
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
 4/7/10 Know the important features of bonds Know how to calculate the value of a coupon bond  and a zero-coupon bond Understand bond ratings and what they mean A basic understanding of term structure of interest  rates Learning Objectives
Background image of page 2
 4/7/10 A Bond Defined a bond is a debt security, in which the authorized  issuer owes the holders a debt and, depending on  the terms of the bond, is obliged to pay interest  ( the coupon ) and/or to repay the  principal  at a  later date, termed  maturity . A bond is a formal  contract to repay borrowed money with interest at  fixed intervals. 3
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
 4/7/10 Important Varibles The  par value  (face value or principal) of a bond  is the amount that the bond issuer agrees to repay  the bondholder at or by the maturity date. The  coupon rate  is the fixed interest rate the  issuer agrees to pay each year. The coupon is  calculated as follows: Coupon = Coupon Rate x Face Value
Background image of page 4
 4/7/10 The term to maturity of a bond is the number of  years the debt is outstanding or the number of  years remaining to final principal payment. Important Variables cont.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
 4/7/10 Bond Valuation General Valuation Model: Coupon Bonds 6 Obj10 = + + + = t t B V 1 t t r) (1 Value Nominal r) (1 Coupon
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/06/2010 for the course ECON 2342 taught by Professor James during the Three '09 term at ADFA.

Page1 / 21

BUS2020F Bonds L1 - BONDS MichaelVermeulen LC5.29 LearningObjectives andazerocouponbond

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online