Fin251

Continuation of bonds.

Face value

payment at maturity.

Coupon rate

interest payment as a percentage of the face value.

Coupon

dollar value.

Take the yield as the discount rate. Assume bond is being valued at the start of the period.

Going through lots of examples. With semi-annual bond periods, use 2 for m rather than 1/2, half the coupon and yield. Can use the internal rate of return calculation to figure out the bond yield and value.

Jumping through a couple of slides to "Earning the promised yield". Three assumptions: reinvestment at the same rate, holding till maturity, paid timely.

Sent from my iPod Touch