Putting the Main Bond Characteristics Together If you buy a bond the issuer ie

Putting the main bond characteristics together if you

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Putting the Main Bond Characteristics Together…If you buy a bond, the issuer (i.e., the borrower) promises to pay you back (i) the “par value” (assume $1000) on a particular day – the "maturity date" – and (ii) periodic “coupons” at a predetermined rate of interest based on the stated "coupon rate" and the number of coupon payments per year.As a creditor/lender, your cash flows to be received will be the par value and the periodic coupon payments.
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Example 2:A Bond with a $1,000 Face Value, a 5% Coupon Paid Semi-AnnuallyJim buys a $1,000 bond with semiannual coupon payments. The bond has an annual stated coupon rate of 5%. What will the coupon payments be on Jim’s bond? 9
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10 More Bond Terminology .
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11 More Bond Terminology
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12 . More Bond Terminology
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13 Sinking Fund: A pool of money set aside by a corporation to help repay a bond issue. To lessen its risk of being short on cash at the time of bond maturity, the company agrees to create a sinking fund. Sinking fund provisions usually allow the company to repurchase its bonds periodically and at a specified sinking fund price (usually the bonds' par value) or the prevailing current market price.
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