FIN%203100%20Brooks%20CH%206_Bond%20Valuation

FIN%203100%20Brooks%20CH%206_Bond%20Valuation - 1...

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Principles of Finance – FIN 3100 Chapter 6  – Bonds and Bond Valuation 1 Patty Robertson
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Agenda Understand important bond features and the different types of  bonds. Understand how bond prices (values) are calculated and why  they fluctuate. 2 Investopedia - What Is A Bond?
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Abbreviations 3
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Debt Versus Equity A firm makes Capital Structure ( funding)  decisions by deciding how to raise money (debt  or equity) to support spending decisions. 4 Assets $1,000 Debt $400 Equity $600 Total Assets $1,000 Balance Sheet
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Which is more risky…debt or equity? Bondholders get interest payments before stockholders  have a claim on any cash. If interest payments are not paid, bondholders can force a  firm into bankruptcy and have a claim to the assets. 5
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FIN%203100%20Brooks%20CH%206_Bond%20Valuation - 1...

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