100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Summary Ch 6 Interest Rates and Bond Valuation - Corporate Finance (COF) (AIF) - Principles of Managerial Finance R128,14
Add to cart

Summary

Summary Ch 6 Interest Rates and Bond Valuation - Corporate Finance (COF) (AIF) - Principles of Managerial Finance

 7 views  0 purchase
  • Course
  • Institution
  • Book

Provides in-depth summary of chapter 6. topics include Interest Rates and Required Returns, Yield Curves, yield to maturity (YTM), Expectations Theory, Liquidity Preference Theory, Market Segmentation Theory etc

Preview 3 out of 24  pages

  • No
  • Unknown
  • February 12, 2024
  • 24
  • 2023/2024
  • Summary
avatar-seller
Interest Rates and Bond
Valuation
Chapter Number Chapter 6

Subject COF




Interest Rates and Bond Valuation 1

, 📖 Table of Contents

Outline
6.1 Interest Rates and Required Returns
INTEREST RATE FUNDAMENTALS
Negative Interest Rates
Nominal and Real Interest Rates
Nominal Interest Rates, Inflation, and Risk
TERM STRUCTURE OF INTEREST RATES
Yield Curves
Theories of the Term Structure
RISK PREMIUMS: ISSUER AND ISSUE CHARACTERISTICS
6.2 Government and Corporate Bonds
LEGAL ASPECTS OF CORPORATE BONDS
Bond Indenture
Trustee
COST OF BONDS TO THE ISSUER
1. Impact of Bond Maturity
2. Impact of Offering Size
3. Impact of Issuer’s Risk
Impact of the Cost of Money
GENERAL FEATURES OF A BOND ISSUE
conversion feature
call feature
stock purchase warrants
BOND YIELDS
BOND PRICES
BOND RATINGS
COMMON TYPES OF BONDS
INTERNATIONAL BOND ISSUES
6.3 Valuation Fundamentals
KEY INPUTS
1. Cash Flows
2. Timing
3. Risk and Required Return
BASIC VALUATION MODEL
6.4 Bond Valuation
BOND FUNDAMENTALS
BOND VALUATION
SEMIANNUAL INTEREST RATES AND BOND VALUES
CHANGES IN BOND VALUES




Interest Rates and Bond Valuation 2

, Required Returns and Bond Values
Calculating Percentage price change
Time to Maturity and Bond Values
YIELD TO MATURITY (YTM)




6.1 Interest Rates and Required Returns
INTEREST RATE FUNDAMENTALS

📍 interest rate: Usually applied to debt instruments such as bank loans or
bonds; the compensation paid by the borrower of funds to the lender; from
the borrower’s point of view, the cost of borrowing funds.




📍 required return: Usually applied to equity instruments such as common
stock; the cost of funds obtained by selling an ownership interest.



historical perspective: forward-looking perspective:

what return did an investment actually what return should we expect the
provide? investment to provide in the future given
its risk?




The equilibrium interest rate, r0, occurs at the intersection of the supply function (labeled S0) and
the demand function (labeled D).



Interest Rates and Bond Valuation 3

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying this summary from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller amy5430. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy this summary for R128,14. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

53068 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy summaries for 14 years now

Start selling
R128,14
  • (0)
Add to cart
Added