FIN 3104 Lecture Notes - Lecture 2: Yield Spread, Current Yield, Yield Curve
5 Oct 2016
School
Department
Course
Professor
Document Summary
Selling short - sell/borrow the stock first from a broker if you expect the price to decrease, then you buy it back later when the price falls and make a profit. Preferred stockholders - have prior claim on income and assets of a firm (compared to common stockholders) Preferred - preferred has a claim in terms of bankruptcy before common stockholders. Collateralized debt obligations - financial product that pools together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors (there is collateral there in case of default) Debentures - type of debt instrument no secured by physical assets or collateral. Par value = amount you get at maturity. Interest paid - (coupon/interest rate) x (par value) Current yield = interest paid / price of bond. Yield spread - the difference between the yield on a non-treasury bond and the yield ona treasury bond of comparable maturity.
