FIN 300 Lecture Notes - Lecture 6: Negative Number, Corporate Bond, Credit Risk
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6 Dec 2017
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Understand bond terminology & analyze why bond prices change over time. Compute the price and yield to maturity of a zero-coupon bond. Compute the price and yield to maturity of a coupon bond. Know how credit risk affects the expected return from holding a corporate bond. Premium: a price at which coupon bonds trade that is greater than their face value. Discount: a price at which coupon bonds trade that is lower than their face value. Par: a price at which coupon bonds trade that is equal to their face value. Bond indenture details of the bond along with the specifications of payments and dates. Maturity date final repayment date of a bond. Term time remaining until the final repayment date of the bond. Face value par value or principal amount. Coupons promises of interest payments on a bond, paid periodically until maturity of the bond.
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