Interpreting bond quotations quotations information

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Unformatted text preview: he issuer to pay a slightly lower coupon interest rate than would otherwise be required. Interpreting Bond Quotations quotations Information on bonds, stocks, and other securities, including current price data and statistics on recent price behavior. The financial manager needs to stay abreast of the market values of the firm’s outstanding securities, whether they are traded on an organized exchange, over the counter, or in international markets. Similarly, existing and prospective investors in the firm’s securities need to monitor the prices of the securities they own because these prices represent the current value of their investment. Information on bonds, stocks, and other securities is contained in quotations, which include current price data along with statistics on recent price behavior. Security price quotations are readily available for actively traded bonds and stocks. The most up-to-date “quotes” can be obtained electronically, via a personal computer. Price information is available from stockbrokers and is widely published in news media. Popular sources of daily security price quotations include financial newspapers, such as the Wall Street Journal and Investor’s Business Daily, and the business sections of daily general newspapers. Here we focus on bond quotations; stock quotations are reviewed in Chapter 7. CHAPTER 6 Interest Rates and Bond Valuation 277 FIGURE 6.4 Bond Quotations Selected bond quotations for April 22, 2002 IBM Source: Wall Street Journal, April 23, 2002, p. C14. Figure 6.4 includes an excerpt from the New York Stock Exchange (NYSE) bond quotations reported in the April 23, 2002, Wall Street Journal for transactions through the close of trading on Monday, April 22, 2002. We’ll look at the corporate bond quotation for IBM, which is highlighted in Figure 6.4. The numbers following the company name—IBM—represent the bond’s coupon interest rate and the year it matures: “7s25” means that the bond has a stated coupon interest rate of 7 percent and matures sometime in the y...
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This document was uploaded on 01/19/2014.

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