Introduction to Corporate Finance
4: Valuing Bonds To calculate this value in Excel, once again we use the PV function, entering 0.08 for the rate, 11 for the num ...
PArT 2: VALUATION, rISk AND reTUrN Breaking this calculation into the annuity and lump sum components, we have: PV PV ofcoupons ...
4: Valuing Bonds 4-2c SeMIANNUAL COMPOUNDING Many bonds make two interest payments per year rather than one, and some pay even m ...
PArT 2: VALUATION, rISk AND reTUrN Because this bond offers investors a return exactly equal to the required rate in the market, ...
4: Valuing Bonds 4-2d BOND PrICeS AND INTereST rATeS A bond’s market price changes frequently as time passes. Whether a bond sel ...
PArT 2: VALUATION, rISk AND reTUrN FIGUre 4.2 THE RELATIONSHIP BETWEEN BOND PRICES AND REQUIRED RETURNS FOR BONDS WITH DIFFERING ...
4: Valuing Bonds Inflation and Interest rates One of the main factors causing interest rate movements is inflation, which is a r ...
PArT 2: VALUATION, rISk AND reTUrN Consider Figure 4.4. The bars plot the quarter-by-quarter annual rates of inflation for Austr ...
4: Valuing Bonds example Suppose it is late 2015, and with the economy still in the doldrums from the last recession, most inves ...
PArT 2: VALUATION, rISk AND reTUrN bond’s value falls from €1,000 to €794.35, an investor holding the bond experiences an opport ...
4: Valuing Bonds When corporations and state government bodies issue bonds in the primary market, they do so with the help of in ...
PArT 2: VALUATION, rISk AND reTUrN issue highly rated (very low-risk) bonds, although not all states are rated at the lowest ris ...
4: Valuing Bonds bond rate, the prime rate charged by Australian banks for funds loaned overnight to each other (the ‘cash rate’ ...
PArT 2: VALUATION, rISk AND reTUrN In some cases, however, companies pledge collateral when they issue bonds. Collateral refers ...
4: Valuing Bonds TABLe 4.1 ZERO-COUPON BOND PRICES AND TAXABLE INCOME Suppose a zero-coupon bond paid no interest, so investors ...
PArT 2: VALUATION, rISk AND reTUrN bond indenture requires that, at maturity, bondholders accept ordinary shares in the underlyi ...
4: Valuing Bonds CONCEPT REVIEW QUESTIONS 4-3 9 What are the main types of issuers of bonds in Australia and New Zealand? 10 Wha ...
PArT 2: VALUATION, rISk AND reTUrN The coupon rate as noted is 10%, paid quarterly until 27 October 2014: this amounted to 2.5% ...
4: Valuing Bonds or junk bonds. The term ‘junk bonds’ has a derogatory connotation, but simply means that these bonds are riskie ...
PArT 2: VALUATION, rISk AND reTUrN TABLe 4.4 THE RELATIONSHIP BETWEEN BOND RATINGS AND SPREADS AT DIFFERENT MATURITIES IN THE US ...
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