西南财经大学公司金融PPT教材.pptVIP

许志 西南财经大学金融学院 Corporate Finance —— Lecture Five What is Bond? Definition A bond is a legally binding agreement between a borrower and a lender: Specifies the principal amount of the loan. Specifies the size and timing of the cash flows: In dollar terms (fixed-rate borrowing) As a formula (adjustable-rate borrowing) Some Relative Conceptions Coupon The stated interest payment made on a bond. Face Value (par value) The principal amount of a bond that is repaid at the end of the term. Coupon Rate The annual coupon divided by the face value of a bond. Maturity Specified date on which the principal amount of a bond is paid. Example of a Bond Consider a U.S. government bond listed as 6 3/8 of December 2009. The Par Value of the bond is $1,000. Coupon payments are made semi-annually (June 30 and December 31 for this particular bond). Since the coupon rate is 6 3/8 the payment is $31.875. On January 1, 2002 the size and timing of cash flows are: How to Value Bonds Identify the size and timing of cash flows. Discount at the correct discount rate. If you know the price of a bond and the size and timing of cash flows, the yield to maturity is the discount rate. Pure Discount Bonds Information needed for valuing pure discount bonds: Time to maturity (T) = Maturity date - today’s date Face value (F) Discount rate (r) 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%. Level-Coupon Bonds Information needed to value level-coupon bonds: Coupon payment dates and time to maturity (T) Coupon payment (C) per period and Face value (F) Discount rate Level-Coupon Bonds: Example Find the present value (as of January 1, 2002), of a 6-3/8 coupon T-bond with semi-annual payments, and a maturity date of December 2009 if the YTM is 5-percent. On January 1, 2002 the size and timing of cash flows are: Further Concepts Bond prices and market interest rates move in opposit