KIC000051 - What are bonds? Bond Valuation I A bond is a...

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Bond Valuation I Contractual Provisions Par Value or Face Value » The principal amount of a bond that is repaid to the lender at the end of the bond's term. Coupon Payment » The periodic interest payment (in dollars) made on a bond. Coupon Rate » The annual coupon payment expressed as a percent of face value. Maturity Date ,. The specified date when the principal amount is paid. Bond Valuation Given face value, coupon payments, number of periods to maturity and required rate of return, we can write down a bond's intrinsic value as: C[ 1] F VB =; 1- (l+rj + (l+rj .~ What are bonds? A bond is a contract or a promissory note issued by a corporation or government promising to pay the owner of the bond a pre-determined set of cash flows. The bond indenture is the contract between the issuer and the bondholder specifying the par value, coupon rate, and maturity date of the bond. A typical bond is an interest-only
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KIC000051 - What are bonds? Bond Valuation I A bond is a...

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