财务管理基础全套配套课件沈洪涛 ch07.ppt

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1、CHAPTER7BondsandTheirValuationKeyfeaturesofbondsBondvaluationMeasuringyieldAssessingriskWhatisabond?Along-termdebtinstrumentinwhichaborroweragreestomakepaymentsofprincipalandinterest,onspecificdates,totheholdersofthebond.BondmarketsPrimarilytradedintheover-the-counter(OTC)market.Mostbondsare

2、ownedbyandtradedamonglargefinancialinstitutions.FullinformationonbondtradesintheOTCmarketisnotpublished,butarepresentativegroupofbondsislistedandtradedonthebonddivisionoftheNYSE.KeyFeaturesofaBondParvalue–faceamountofthebond,whichispaidatmaturity(assume$1,000).Couponinterestrate–statedinter

3、estrate(generallyfixed)paidbytheissuer.Multiplybypartogetdollarpaymentofinterest.Maturitydate–yearsuntilthebondmustberepaid.Issuedate–whenthebondwasissued.Yieldtomaturity-rateofreturnearnedonabondhelduntilmaturity(alsocalledthe“promisedyield”).EffectofacallprovisionAllowsissuertorefundthebo

4、ndissueifratesdecline(helpstheissuer,buthurtstheinvestor).Borrowersarewillingtopaymore,andlendersrequiremore,forcallablebonds.Mostbondshaveadeferredcallandadecliningcallpremium.Whatisasinkingfund?Provisiontopayoffaloanoveritsliferatherthanallatmaturity.Similartoamortizationonatermloan.Reduce

5、srisktoinvestor,shortensaveragematurity.Butnotgoodforinvestorsifratesdeclineafterissuance.Howaresinkingfundsexecuted?Callx%oftheissueatpar,forsinkingfundpurposes.Likelytobeusedifkdisbelowthecouponrateandthebondsellsatapremium.Buybondsintheopenmarket.Likelytobeusedifkdisabovethecouponrateandt

6、hebondsellsatadiscount.Thevalueoffinancialassets012nkCF1CFnCF2Value...Othertypes(features)ofbondsConvertiblebond–maybeexchangedforcommonstockofthefirm,attheholder’soption.Warrant–long-termoptiontobuyastatednumberofsharesofcommonstockataspecifiedprice.Putablebond–allowsholdertosellthebondback

7、tothecompanypriortomaturity.Incomebond–paysinterestonlywheninterestisearnedbythefirm.Indexedbond–interestratepaidisbasedupontherateofinflation.Whatistheopportunitycostofdebtcapital?Thediscountrate(ki)istheopportunitycostofcapital,andistheratethatco