Financial Markets

Financial Markets - Financial Markets I Financial Markets...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Financial Markets I. Financial Markets: link borrowers and lenders. Determine interest rates, stock prices, bond prices, etc. a. Bonds: a promise by the bond issuer to pay some specified amount in the future in exchange for some payment (the bond price) today b. Stocks: legal rights of ownership in an incorporated firm, promise the stockholder a share of corporate profits (dividends) II. Bond Market a. Maturity Date b. Coupon Rate: the interest rate, bond holder receives an annual interest payment equal to the coupon rate times the maturity value c. Yield to Maturity: how much you earned all together, represents the effective interest rate that the bond holder earns if the bond is held to maturity d. Bond Price: price that the bond sells for d.i. At Par: bond price is equal to maturity value d.ii. Below Par: bond price is less than its maturity value d.ii.1. Interest rate < market rate d.iii. Above Par: bond price is greater than its maturity value d.iii.1. Interest rate >market rate III. Present Value = FV/(1+r) to the t
Background image of page 1

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

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 3

Financial Markets - Financial Markets I Financial Markets...

This preview shows document pages 1 - 2. Sign up to view the full document.

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