# Finance bonds

Home > Preview

The flashcards below were created by user bobjr247 on FreezingBlue Flashcards.

1. Coupon
regular interest payments that borrower pays
2. level coupon bond
constant coupon paid every year.
3. Face value/Par value
Amount that will be repaid/principal paid at maturity
4. Coupon rate
annual coupon divided by face value (120/1000=.12)
5. Coupon payment
stated interest on bond
6. Maturity
# of years until face value repaid
7. As interest rates increase, the present values_____
declines (worth less/interest rates increase bond prices decrease)
8. When interest rates fall, the bond is worth______
More
9. Yield or Yield to maturity (YTM)
rate required in the market
10. Current Yield
Annual Coupon/Price
11. Bond value =
• PV of coupons + PV of par value
• or
• PV of annuity +PV of lump sum
12. Consider a bond with a coupon rate
of 10% and annual coupons. The par value is \$1,000 and the bond has 5 years to
maturity. The yield to maturity is 11%. What is the value of the bond?
N =5; I/Y = 11; PMT = 100; FV = 1,000

CPT PV = -963.04
13. Discount bond
bond sells for less than face value
14. §Suppose you are looking at a bond
that has a 10% annual coupon and a face value of \$1000. There are 20 years to
maturity and the yield to maturity is 8%. What is the price of this bond?
N =20; I/Y = 8; PMT = 100; FV = 1000

• CPTPV = -1,196.36
15. 1.If YTM = coupon rate, then par
value =_____
bond price
16. 1.If YTM > coupon rate, then par
value > ______
bond price
17. If YTM < coupon rate, then par value <______
bond price
18. Let
the Coupon rate = 14% with semiannual coupons; YTM = 16%; Maturity = 7 years; Par value = \$1,000

What is the bond worth now?
1.How many coupon payments are there?
2.What is the semiannual coupon
payment?
3.What is the semiannual yield?
• PMT = 70; N = 14; I/Y = 8; FV =
• 1,000; CPT PV = -917.56

### Card Set Information

 Author: bobjr247 ID: 108226 Filename: Finance bonds Updated: 2011-10-12 00:00:00 Tags: chapter Folders: Description: ch. 6 Show Answers:

What would you like to do?

Home > Flashcards > Print Preview