Principles of Corporate Finance_ 12th Edition

52 Part One Value bre44380_ch03_046-075.indd 52 09/30/15 12:47 PM A change in interest rates has only a modest impact on the val ...

Chapter 3 Valuing Bonds 53 bre44380_ch03_046-075.indd 53 09/30/15 12:47 PM measure of the average maturity, one that could be us ...

54 Part One Value bre44380_ch03_046-075.indd 54 09/30/15 12:47 PM cash flow and multiply each fraction by the year of the cash f ...

Chapter 3 Valuing Bonds 55 bre44380_ch03_046-075.indd 55 09/30/15 12:47 PM ◗ FIGURE 3.3 Short- and long-term interest rates do n ...

56 Part One Value bre44380_ch03_046-075.indd 56 09/30/15 12:47 PM Table 3.5 illustrates how the law of one price applies to gove ...

Chapter 3 Valuing Bonds 57 bre44380_ch03_046-075.indd 57 09/30/15 12:47 PM semiannual coupon strips, each paying $21.25, and a p ...

58 Part One Value bre44380_ch03_046-075.indd 58 09/30/15 12:47 PM step, therefore, is to go to her bank and borrow the present v ...

Chapter 3 Valuing Bonds 59 bre44380_ch03_046-075.indd 59 09/30/15 12:47 PM We have just illustrated (in Example 3.3) the expecta ...

60 Part One Value bre44380_ch03_046-075.indd 60 09/30/15 12:47 PM offers the highest return. But, if you are not sure of your fo ...

Chapter 3 Valuing Bonds 61 bre44380_ch03_046-075.indd 61 09/30/15 12:47 PM Prices can fall as well as rise. The U.S. experienced ...

62 Part One Value bre44380_ch03_046-075.indd 62 09/30/15 12:47 PM The formula for converting nominal cash flows in a future peri ...

Chapter 3 Valuing Bonds 63 bre44380_ch03_046-075.indd 63 09/30/15 12:47 PM The real cash flows on TIPS are fixed, but the nomina ...

64 Part One Value bre44380_ch03_046-075.indd 64 09/30/15 12:47 PM This is Fisher’s theory: A change in the expected inflation ra ...

Chapter 3 Valuing Bonds 65 bre44380_ch03_046-075.indd 65 10/08/15 10:45 AM ◗ FIGURE 3.8 The return on Treasury bills and the rat ...

66 Part One Value bre44380_ch03_046-075.indd 66 09/30/15 12:47 PM best-case scenario: The firm will never pay more than the prom ...

Chapter 3 Valuing Bonds 67 bre44380_ch03_046-075.indd 67 10/08/15 10:45 AM Because of the risk of default, yields on corporate b ...

● ● ● ● ● FINANCE IN PRACTICE ❱ In 2010, the U.S. Congress set a ceiling of $14.3 trillion on the amount that the federal govern ...

69 bre44380_ch03_046-075.indd 69 09/30/15 12:47 PM ● ● ● ● ● USEFUL SPREADSHEET FUNCTIONS ❱ Spreadsheet programs such as Excel p ...

70 Part One Value bre44380_ch03_046-075.indd 70 09/30/15 12:47 PM Bonds are simply long-term loans. If you own a bond, you are e ...

Chapter 3 Valuing Bonds 71 bre44380_ch03_046-075.indd 71 09/30/15 12:47 PM Two good general texts on fixed income markets are: F ...