Lecture #7 - Ec 136, Financial Economics Lecture 7...

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Unformatted text preview: Ec 136, Financial Economics Lecture 7 September 17 Outline for today 1. Fixed income securities 2. Bond pricing 3. The geometric sum http://econ.berkeley.edu/~szeidl/ec136/ec136index.htm Readings: BKM Chapter 14.1-14.4; see also Chapter 2. Problem set 3 : due September 24, Thurs, in class. 1. Fixed Income Securities & Fixed income securities promise to pay a pre-speci&ed amount in the future. Classic types: 1. Zero coupon bond makes a single payment of its face value at the date of maturity. Exam- ple: US Treasury bills. 2. Coupon bond makes series of coupon pay- ments up to and including maturity date, then pays face value. Example: US Treasury bonds. 3. Mortgage makes series of payments up to and including the maturity date, but no &nal pay- ment of face value. & Variations: 1. Random &nal date e.g., date of ones death. 2. Payments are &xed in real terms: US Treasury Ination Protected Securities (TIPS). 09/15/2009 Credit rating Price Issuer name (symbol) Coupon % Maturity Moody's S.&P. Fitch Last Change Yield % Citigroup C.HRY 8.50% May '19 A3 A A+ 113.854 +1.38 6.54% Citigroup C.GOR 6.38% Aug '14 A3 A A+ 105.565 +2.01 5.08% Goldman Sachs Gp GS.HQQ 1.63% Jul '11 Aaa n.a. AAA 100.91 0.108 1.12% Citigroup C.HFV 8.13% Jul '39 A3 A A+ 111.13 +1.75 7.21% Pfizer PFE.GN 4.45% Mar '12 Aa2 AAA AA 106.056 0.125 1.95% Morgan Stanley MS.HDO 2.90% Dec '10 Aaa AAA AAA 102.817 +0.007 0.55% Dow Chemical Co DOW.TY 8.55% May '19 Baa3 BBB- BBB 112.125 +1.17 6.81% Shell Intl Finance Bv RDS.GD 6.38% Dec '38 Aa1 AA AA+ 116.36 1.26 5.27% Citibank Na C.HSN 1.38% Aug '11 Aaa AAA AAA 100.391AAA 100....
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This note was uploaded on 09/02/2010 for the course ECON 136 taught by Professor Szeidl during the Fall '08 term at University of California, Berkeley.

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Lecture #7 - Ec 136, Financial Economics Lecture 7...

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