FIN4360_Chapter17_Slides

FIN4360_Chapter17_Slides - Types of Issues Secured (senior)...

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Investment Analysis and Portfolio Management C h a p t e r 1 7 Bond Fundamentals Basic Features of a Bond Global Bond Market Structure Alternative Bond Issues Obtaining Information on Bond Prices
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17-2 Basic Features of a Bond Bonds as fixed income securities Pay a fixed amount of interest periodically to the holder of record Repay a fixed amount of principal at the date of maturity Bond market is divided by maturity Money Market: Short-term issues that mature within one year Notes: Intermediate-term issues that mature between one and ten years Bonds: Long-term obligations with maturity greater than ten years
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17-3 Bond Characteristics Intrinsic Features Coupon: Determine the periodic interest income Term to maturity: Term bond or a serial bond Principal value: Different from market value and the common principal or par value is $1,000 Type of ownership: Bearer vs. registered bonds
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Unformatted text preview: Types of Issues Secured (senior) bonds Unsecured bonds (debentures) Subordinated (junior) debentures 17-4 Bond Characteristics Indenture provisions The indenture is the contract between the issuer and the bondholder specifying the issuers legal requirements Features affecting a bonds maturity Callable (call premium) Noncallable Deferred call Nonrefunding provision Sinking fund 17-5 Rates of Return on Bonds t i, t i, 1 t i, t i, P Int P HPR + = + The Computations of Bond Return Holding period return where: HPR i,t = the holding period return for bond i during period t P i,t+1 = the market price of bond i at the end of period t P i,t = the market price of bond i at the beginning of period t Int i,t = the interest payments on bond i during period t The holding period yield (HPY) is HPY = HPR - 1...
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This note was uploaded on 01/24/2012 for the course FIN 4360 taught by Professor Davidbray during the Spring '12 term at Kennesaw.

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FIN4360_Chapter17_Slides - Types of Issues Secured (senior)...

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