Chapter 6

Chapter 6 - Chapter 6 Bonds primary means of borrowing...

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Chapter 6 Bonds primary means of borrowing money used in the corporate world today. a bond is basically a debt agreement with investors and savers that obligates the corporation to make certain payments to the investor in exhange for money the investor lends to the corportation today. principle isnt paid until the bond is matured and all the payments made before then are interest. Pay fixed coupon payments at fixed intervals and pay the par value at maturity. Fixed-income securities bonds are classified as fixed-income securities, meaning that they pay a fixed interest payment each year. Par Value or "Face Value" the sum of money that the corporation promises to pay at the bond's expiration. in most cases, it is also the amount that the bondholder gives to the corporation today. Coupon Rate or "Coupon Yield" is the interest rate of the bond. multiplying the coupon rate by the par value gives the amount of the bond's yearly coupon, or interest payment. For example, a $1000 par value bond with a 9% coupon rate will pay $1,000 x .09 = $90 in interest annually. Just tells you the size of the coupon payments. Maturity
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Chapter 6 - Chapter 6 Bonds primary means of borrowing...

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