PPT-Bond Prices and Interest Rate Risk

Chapter 5 Kidwell Blackwell Whidbee and Sias 101017 Chapter 5 Kidwell Blackwell Whidbee amp Sias 1 The Time Value of Money Investingin financial assets or in real assetsmeans giving up consumption until later. Bonds and Their Valuation. A bond is simply a negotiable . IOU. , or a loan. . Investors who buy bonds are . lending. a specific sum of money to a corporation, government, or some other borrowing institution.. Long-term. Liabilities. Long-term. Liabilities. Long-term liabilities . are . debts. . and obligations . that a company expects to satisfy in more than one year or beyond its normal operating cycle, whichever is longer.. Key Features of Bonds. Bond Valuation. Measuring Yield. Assessing Risk. Chapter 7. What is a bond?. A long-term debt instrument in which a borrower (bond issuer) agrees to make payments of principal and interest, on specific dates, to the lender (bondholders). Bond Prices and Yields . Bond characteristics . Bond pricing . Bond yields . Bond prices over time . Default risk . 2.  Bond Characteristics. Typically a bond is a security in which the issuer (borrower) promises to repay to the lender (investor) the principal at maturity date plus periodic coupon interest over some specified period of time.. Fundamentals of Finance – Lecture 3. Measuring Interest Rates. Present Value:. A dollar paid to you one year from now is less valuable than a dollar paid to you today. Why?. A dollar deposited today can earn interest and become 1 x (1+i) one year from today. . A Bond Issued by Macy’s. Term . Amount of issue. $550. million. Date of issue. 01/15/2012. Maturity. 01/15/2022. Face value. $2,000. Annual coupon. 3.875. Offer price (%). 99.189. Coupon payment dates. Financial. and . Investment. . Mathematics. Dr. Eva . Cipovova. Bonds. Bonds are a form of financing the operations of a company. Bonds are a debt security because the principle must eventually be returned to the bondholders. Bond Holder. (Lender or Investor). General Public. Financial. Intermediary. Corporation or. Government. Bond Certificates are exchanged. $1,000. $10,000. $100,000. Bond Issue. $1,000,000. Bond Indenture:. O’BRIEN. Money,. Banking, and. the Financial System. Interest Rates and Rates of Return. C H A P T E R. 3. 3.1. 3.2. 3.3. Explain how the interest rate links present value with future value. LEARNING OBJECTIVES. David Lee. FinPricing. http:. //www.finpricing.com. Amortizing Bond. Summary. Amortizing Bond an Accreting Bond Introduction. The Use of Amortizing Bonds and Accreting Bonds. Valuation. Practical . Guide. Interest Rates I: Money & Banking - ECO 473 - Dr. D. Foster The Basics What is interest? Payment made to savers to compensate them for foregoing consumption. “The most powerful force in the universe is compound interest.” Interest Rates I: Money & Banking - ECO 473 - Dr. D. Foster The Basics What is interest? Payment made to savers to compensate them for foregoing consumption. “The most powerful force in the universe is compound interest.” The Horizons Active Ultra-Short Term US Investment Grade Bond ETF (“HUF.U”) is a U.S. dollar-denominated corporate bond ETF designed to generate income that is consistent with prevailing The problem large organizations run into is that they typically need far more money than the average bank can provide.. . The solution is to raise money by issuing bonds (or other debt instruments) to a .