BU111 Lecture Notes - Lecture 19: Bearer Bond, Annual Percentage Rate, Capital Gain
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The roles of 4 pillars for business financing. Pillars 1 & 2 - banks and alternate banks: trust companies, credit unions, go to banks for a loan, make deposits, borrow, sme- primary lending source. Pillar 3 specialized lending/saving intermediaries: equity investing, mid-large, private equity financing/borrow, ex: dragons den. Pillar 4 investment dealer: large and established, going public; stocks and bonds. Question: where could you get a specific loan/bond. Unsecured (debentures: canada savings bonds today are debentures, registered vs. Concept of yield: percentage return on any investment. Investment instruments of the same risk should give you the same yield: high risk=high yield, low risk=low yield, helps us to compare investments, yield = what you made = interest +capital gain =x% ^ use if there is a different in what is made: for a bond. Interest= coupon rate x face value: capital gain = face value purchase price, *for bu111, always use a face value of for bonds.
