Define par value and maturity date used in bond valuation

Reference no: EM131329305

1. What is the relationship between the price of a financial asset and the return that investors require on that asset, holding other factors constant?

2. Define the following terms commonly used in bond valuation:

(a) par value,

(b) maturity date,

(d) coupon rate,

(e) coupon yield,

(f) yield to maturity (YTM), and

(g) yield curve.

3. Under what circumstances will a bond's coupon rate exceed its coupon yield? Explain in economic terms why this occurs.

Reference no: EM131329305

Questions Cloud

Compute contribution margin per pound of materials used : Compute contribution margin per pound of materials used. Which orders would you advise the company to accept first, those for A, for B, or for C? Which orders second? Third?

What happens if the ytm changes to 6 percent : What are the YTMs on each bond?- If the YTM changes to 4 percent, what happens to the price of each bond?- What happens if the YTM changes to 6 percent?

How many bytes have to be stored for each entry : In this case, assume ASICs which can perform 107 keys per second at a cost of $5 per IC. Furthermore, assume an overhead of 50% for building the key search machine

Analyze the problem in the scenario : Analyze the problem in the scenario - Generate options for solving the problem in the scenario and Evaluate the options for solving the problem - Decide on the best option for solving the problem.

Define par value and maturity date used in bond valuation : What is the relationship between the price of a financial asset and the return that investors require on that asset, holding other factors constant?

Explain revenue principle and its implication on statements : Explain the revenue principle and its implication on the financial statements. Define the matching principle and why it is critical in the preparation of the accrual-based financial statements.

Discuss the effects of your own enculturation : Identify (3) three premises (reasons) from the Procon.org website that support your position and explain why you selected these specific reasons - Examine at least two (2) types of biases that you likely experienced as you evaluated the premises f..

What evidence is there of the direction of convergence : What evidence is there of the direction of convergence: Is US GAAP converging to IFRS, is IFRS converging to US GAAP, or are both converging toward each other?

A pure discount bond and a bond that trades at a discount : If issuers successfully sell pure discount bonds in the market, investors must want them. Can you explain why any bond purchaser might prefer to purchase a pure discount bond rather than a bond that pays interest?

User Account

All Pages