Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Illustration
Discount bond (5 yr. bond with 10% coupon) (expected rate yield at 12%)
Premium bond (expected yield at 7.8%)
5
92.6
109.0
4
93.8
107.4
3
95.1
105.8
2
96.5
104.0
1
98.2
102.0
0
100.0
Reasons for price changes of a bond:
Change in the yield requirement of the issuer due to changes in the quality of credit of the issuer.
Change in the price as the bond approaches maturity in case of premium or discount bond.
Change in the price because of change in the yields of comparable bonds/securities.
While computing the bond pricing, the following assumptions are made:
Cash flows are known.
Coupon payment annually/semi-annually is made at exact period.
Required yield can be estimated.
One rate is used to discount all cash flows, i.e., with required yield rate.
The following cash factors are to be considered:
For callable bonds, cash flows cannot be certain. The investment decisions of the issuer depend on interest rate movements and other factors.
It is not possible to determine the appropriate yields and it need not be a single rate for all the future cash flows.
Interest Rate Derivatives: India's first trading on interest rate derivatives began in the National Stock Exchange of India (NSE) in June 2003 with futures on 91-day treasury
QUESTION i) Distinguish between intermediated and market finance using illustrative examples. ii) Differentiate between the main characteristics of Debt and Equity. iii)
Long-Term Solvency Ratios (Financial Leverage Ratios) Debt-Equity Ratio = Total Debt / Total Equity à It is a measure of a company's debt utilization. It gives the ex
When are the financial crises occurred? Financial crises arise where there is a large raise in asymmetric information into financial markets. Asymmetric information arises whil
What is the investment opportunity schedule (IOS)? How does it help financial managers make business decisions? The investment opportunity schedule depicts graphically propose
Is book value the best proxy to the value of the shares? No. According to A6 it would be a miracle if the number that appears in the Shareholders' Equity had anything to do wit
Case Study based on Financial Statement Analysis of Hatsun Agro Private Limited 800x600 Normal 0 false false false EN-IN X-NONE X-NONE
Let us construct a binomial interest rate tree for a 5.5% option free bond taking Table 3 as the binomial interest rate tree. Table 1 shows the various values in
A factoring company has offered a one-year agreement with Glub Ltd to both manage its debtors and advanced 80 per cent of the value of all its invoices immediately a sale is invoi
Explain how the working capital management policies affect the profitability and liquidity of the firm?
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd