Financial Modelling 2555A/B Chapter Notes - Chapter 3: Discount Window, Current Yield, Spot Contract
11 Oct 2016
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If you own a bond, you are entitled to a fixed set of cash payoffs. Every year until the bond matures, you collect interest payments. When you get the final interest payment, at maturity, you get face value back. Principal: amount of debt that must be repaid. Bearer security: security for which primary evidence of ownership is possession of the. Coupon: interest payment on a debt an attachment to the certificate of a bearer security that must be surrendered to collect interest payment certificate securities. Registered security: se(cid:272)urit(cid:455) (cid:449)hos o(cid:449)(cid:374)ership is re(cid:272)orded (cid:271)(cid:455) the (cid:272)o(cid:373)pa(cid:374)(cid:455)"s registrar. Registrar: financial institution appointed to record issue and ownership of company. Pv = pv(annuity of coupon payments) + pv(final payment of principal) Pv = (coupon x annuity factor) + (final payment x discount factor) Yield to maturity: internal rate of return on a bond. Internal rate of return: discount rate at which investment has 0 npv.
