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Day count convention is a system used to determine the number of days between two coupon dates. It is important in calculating accrued interest and present value when the next coupon payment is less than a full coupon period. Each bond market has its own daycount convention. In calculating the number of days between two dates, the actual number of days is not always the same as the number of days that should be used in the accrued interest formula. The number of days used depend on the day count conventions for the particular securities. Few of the day count conventions used in the bond market are: A 30/360 day count convention, where 30 days in a month and 360 days in a year are considered; actual / actual day-count convention, where actual number of days in a month and year are considered.
Peak Inc. needs to order Canadian raw materials to use in its production process. The Canadian exporter typically invoices Peak in Canadian dollars. Assume that the current exchang
An asset-backed security is a type of bond or note that is based on a pool of assets, or collateralized by the cash flows from a specified pool of underlying assets. As
Nominal spread of a non-treasury bond can be defined as the difference between the bond's yield and the yield to maturity of a benchmark treasury coupon security.
Annuity
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Perform appropriate ratio analyses on the balance sheet and income statements of your company using techniques discussed in chapter 2 of your textbook. Compare your company to a c
These are bonds which are offered within the euro market and several other markets simultaneously. Unlike Eurobonds, global bonds can be issued in the same curren
Calculation of weighted average cost of capital (WACC) Market values Market value of equity = 5m × 4.50 = $22.5 million Market value of preference shares = 2.5m × .0762 =
When a company issues new securities, how do flotation costs affect the cost of raising that capital? While a company issues new securities flotation costs raise the cost of rais
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