公司理财教学资料 ppt课件.ppt

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1、Chapter7InterestRatesandBondValuation2021/8/3ChapterOutlineBondsandBondValuationBondFeaturesBondRatingsSomeDifferentTypesofBondsBondMarketsInflationandInterestRatesDeterminantsofBondYields7-22021/8/3MarketValues($Trillion)Valueofoutstandingissues2021/8/3BondsandBondValuationAbondis

2、alegallybindingagreementbetweenaborrowerandalenderthatspecifiesthe:Par(face)valueCouponrateCouponpaymentMaturityDateTheyieldtomaturityistherequiredmarketinterestrateonthebond.DonotconfusethecouponratewiththerequiredmarketinterestrateBondDefinitionsBondParvalue(facevalue)CouponrateC

3、ouponpaymentMaturitydateYieldorYieldtomaturity(requiredreturn,marketrate)7-52021/8/3TheBond-PricingEquationNoticethat:Thefirsttermisthepresentvalueofthecouponpayments(anannuity);and,Thesecondtermisthepresentvalueofthebond’sparvalueBond=PresentValueofCashFlowsBondValue=PVofcoupons+P

4、VofparBondValue=PVofannuity+PVoflumpsumAsinterestratesincrease,presentvaluesdecreaseSo,asinterestratesincrease,bondpricesdecreaseandviceversa7-72021/8/3ValuingaDiscountBondwithAnnualCouponsConsiderabondwithacouponrateof10%andannualcoupons.Theparvalueis$1,000,andthebondhas5yearstoma

5、turity.Theyieldtomaturityis11%.Whatisthevalueofthebond?Usingtheformula:B=PVofannuity+PVoflumpsumB=100[1–1/(1.11)5]/.11+1,000/(1.11)5B=369.59+593.45=963.04Usingthecalculator:N=5;I/Y=11;PMT=100;FV=1,000CPTPV=-963.047-82021/8/3ValuingaPremiumBondwithAnnualCouponsSupposeyouarereviewing

6、abondthathasa10%annualcouponandafacevalueof$1000.Thereare20yearstomaturity,andtheyieldtomaturityis8%.Whatisthepriceofthisbond?Usingtheformula:B=PVofannuity+PVoflumpsumB=100[1–1/(1.08)20]/.08+1000/(1.08)20B=981.81+214.55=1196.36Usingthecalculator:N=20;I/Y=8;PMT=100;FV=1000CPTPV=-1,1

7、96.367-92021/8/3GraphicalRelationshipBetweenPriceandYield-to-maturity(YTM)BondPriceYield-to-maturity(YTM)7-102021/8/3BondPrices:RelationshipBetweenCouponandYieldIfYTM=couponrate,thenparvalue=bondpriceIfYTM>couponrate,thenparvalue>bondpriceWhy?Thediscountprovidesyieldabovecouponrate

8、Pricebelowparvalue,calleda