公司理财(双语)4valuingbonds课件.pptVIP

Bonds A bond is a security that pays a stated amount of interest to the investor, then at maturity, it repurchased by the issuing company. simply a long-term loan. Bonds (the indenture) A bond is a legally binding agreement between a borrower and a lender that specifies the: Par (face) value ---principal Coupon rate Coupon payment Maturity Date The yield to maturity is the required market interest rate on the bond. Bonds Face value is the stated value of an asset. In the case of a bond, the face value is usually $1000 The face value is supposed to be paid back to the bondholders as the principal, no matter what the purchasing price of the bond Coupon：annual interest payment Coupon rate: the stated rate of interest on a bond; or the annual interest payment divided by bond’s face value Treasury Bond – issued by the federal government. Corporate Bond – issued by corporations. Municipal Bonds – issued by state and local governments. Foreign Bonds – issued by either foreign governments or foreign corporations. Zero-coupon bonds is a bond bought at a price lower than its?face value, with the face value repaid at the time of? maturity. (pure discount bonds) A bond that does not make coupon payments. The only cash payment the investor receives is the face value of the bond on maturity date. Eg: Treasury bills The yield to maturity Yield to Maturity – the rate of return earned on a bond if it is held to maturity According to the definition, the yield to maturity of one year zero coupon bond solves the following : 96,618.336=100,000/1+YTM YTM=3.5% Pure Discount Bonds: Example Find the value of a 30-year zero-coupon bond with a $1,000 par value and a YTM of 6%. Equation Equation Yield to Maturity of an n-Year Zero-Coupon Bond Example Yields for Different Maturities Example 8.1 Yields for Different Maturities Equation Risk-Free Interest Rate with Maturity n Graphical Relationship Between Price and Yield-to-maturity (YTM) Coupon bonds Like zero-coupo