Management and Organizational Studies 2310A/B Chapter Notes - Chapter 7: Interest Rate Risk, Premium Bond, Zero-Coupon Bond

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Shang Tang

Document Summary

If ytm = coupon rate, then par value = bond price. If ytm > coupon rate, then par value = bond price. Selling at a discount, called a discount bond. If ytm < coupon rate , then par value < bond price. F - face value paid at maturity: c - coupon rate paid per period t periods to maturity r yield per period. Semi-annual coupons: most bonds in canada make coupon payments semi-annually, market automatically makes this assumption. Differences between debt and equity: debt, not an ownership interest, bondholders do not have voting rights. Includes: the basic terms of the bonds, the total amount of bonds issued, a description of property used as security, if applicable. Company pays interest and principal by cheque mailed directly to the address of the owner of record: bearer- bond issued without record of the owner"s name; payment is made to whoever holds the bond.