Bonds and Their Valuation教程教案.pptVIP

Bonds and Their Valuation;What is a bond?;Bond Markets;Key Features of a Bond;Effect of a Call Provision;The Value of Financial Assets;Other Types (Features) of Bonds;What is the opportunity cost of debt capital?;What is the value of a 10-year, 10% annual coupon bond, if rd = 10%?;Calculating the Value of a Bond;What’s the value of its 10-year bonds outstanding with the same risk but a 13% annual coupon rate?;What’s the value of its 10-year bonds outstanding with the same risk but a 7% annual coupon rate?;Changes in Bond Value over Time;Bond Values over Time;What is the YTM on a 10-year, 9% annual coupon, $1,000 par value bond, selling for $887?;Solving for the YTM;Find YTM If the Bond Price is $1,134.20;Definitions;An Example: Current and Capital Gains Yields;Calculating Capital Gains Yield;What is price risk? Does a 1-year or 10-year bond have more price risk? ;Illustrating Price Risk;What is reinvestment risk?;Reinvestment Risk Example;Conclusions about Price Risk and Reinvestment Risk;Semiannual Bonds;What is the value of a 10-year, 10% semiannual coupon bond, if rd = 13%?;The semiannual bond’s effective rate is: Excel: =EFFECT(.10,2) = 10.25% 10.25% 10% (the annual bond’s effective rate), so you would prefer the semiannual bond. ;If the proper price for this semiannual bond is $1,000, what would be the proper price for the annual coupon bond?;A 10-year, 10% semiannual coupon bond selling for $1,135.90 can be called in 4 years for $1,050, what is its yield to call (YTC)?;Yield to Call;If you bought these callable bonds, would you be more likely to earn the YTM or YTC?;When is a call more likely to occur?;Default Risk;Types of Bonds;Evaluating Default Risk:Bond Ratings;Factors Affecting Default Risk and Bond Ratings;Other Factors Affecting Default Risk;Bankruptcy;Chapter 11 Bankruptcy;Priority of Claims in Liquidation;Reorganization