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No matter what your job in the financial industry you

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No matter what your job in the financial industry, you will be involved with stocks in one way or another.WHAT ARE BONDS?Bondsare fixed-income securities thatareissued by corporations and governments toraise capital. Thebond issuerborrows capitalfrom the bondholder and makes fixed paymentstothem at a fixed (or variable) interest rate for aspecified period.WHAT IS AN INDENTURE?Anindentureis a binding contract between an issuer and bondholder that outlines the characteristics ofthe bond. It typically includes:Date of maturityInterest payment datesWhether it is convertible or callable (or neither)Terms and conditionsKEY TERMSYield/Yield to Maturity (YTM)– The annual rate of return of a bond that is held to maturity (assumingall payments are not delayed).Principal (or Face Value)– The initial amount of money invested in the bond.Maturity– The date that the bond expires, when the principal must be paid to the bondholder.Coupon Rate– The interest payments that the issuer makes to the bondholder. They are typicallymade semi-annually (every six months) but can vary.Default– When an individual or entity cannot pay a creditor the pre-specified amount of interest orprincipal (based on a legal obligation), the person or entity may default, allowing the debtholder to claimtheir assets for repayment.WHAT ARE PAR, PREMIUM, AND DISCOUNT BONDS?
18FM-AA-CIA-15 Rev. 010-July-2020PANGASINAN STATE UNIVERSITYGE7 - Mathematics in the Modern WorldModule in MATHEMATICS OF FINANCEPar Coupon rate = YieldPremium Coupon rate > YieldInvestors will pay a premium (higher price) for a bond that offers a higher coupon rate thanthe market yield.Discount Coupon rate < YieldInvestors will pay a discount (lower price) for a bond that offers a lower coupon rate thanthe market yield.Examples of Bonds

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Term
Winter
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Mathematics of Finance, pangasinan state university

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