ECON201 Lecture Notes - Lecture 17: David F. Swensen, Israel Bonds, Bond Market
24 Feb 2018
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Less investments in government bonds: more investments in risky stocks and assets, higher risk = higher returns. Video: a day in the life of a bond trader. Israel and lebanon clash on the border (conflict) Fixed income: government of canada issue 5% coupon bonds, payable semiannually (due dec 31, 2027, face value (fv): (principal, price: (buying at a discount of ) 20 (jan 2017) (june 30, 2017) (dec 31, 2017) (june 30, 2018) (dec 30, 2018) (dec 31, 2027) Low creditworthiness = investors expect a higher rate of return: bond premium. Increased rate = pv would go down: market interest rate (overall interest rates in the economy, what happens if an increased risk occurs after the bonds have already been bought, value of the bond will decrease. If you buy the bond at , its value may decrease to .
