FRL 300 Midterm 2 Topics

FRL 300 Midterm 2 Topics - FRL 300 Midterm 2 Topics Chapter...

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FRL 300 Midterm 2 Topics Chapter 7: Bonds and Bond Valuation 1. Bond Terminology (What is a bond? What is the nature of the bondholders’ claim on the assets and income of the firm? What is the meaning of par value, coupon interest rate, maturity, current yield and YTM) 2. Bond Valuation Calculate bond values with annual coupon and semiannual coupon payment Calculate the YTM (“bond yields”) Important relationships relating to bond valuation (How do changes in market interest rate (required return) affect bond values? What are the relationships between coupon rate and YTM for premium bond, par bond and discount bond?) 3. Bond Indenture Definition of bond indenture Contents of bond indenture o Issue Date and Maturity Date; Coupon Rate and Frequency of Coupon Payment o Repayment (Sinking Fund) Provision 4. Types of Bonds: Classified by issuer o Federal Government Bonds, State and Local Government Bonds (“Munis”), and Corporate Bonds o Compute and compare the after-tax returns on Corporate bonds versus Munis
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This note was uploaded on 01/13/2012 for the course FR 403 taught by Professor Hoffman during the Spring '11 term at Central Washington University.

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FRL 300 Midterm 2 Topics - FRL 300 Midterm 2 Topics Chapter...

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