Security Selection Intrinsic Valuation - Welcome to the …安全选择内在价值-欢迎来到….ppt

6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* 6.* Yield-to-maturity (YTM) = the market required rate of return implied by the current bond price If given all information except YTM, the YTM can only be solved through iterative methods (“trial an error”) The bond valuation eqn cannot be rearranged for ‘r’. YTM’s are easily solved using Excel or financial calculators. 6-* 6-* * High Grade Moody’s Aaa and SP AAA – capacity to pay is extremely strong Moody’s Aa and SP AA – capacity to pay is very strong Medium Grade Moody’s A and SP A – capacity to pay is strong, but more susceptible to changes in circumstances Moody’s Baa and SP BBB – capacity to pay is adequate, adverse conditions will have more impact on the firm’s ability to pay 6-* Return to Quiz Low Grade Moody’s Ba, B, Caa and Ca SP BB, B, CCC, CC Considered speculative with respect to capacity to pay. The “B” ratings are the lowest degree of speculation. Very Low Grade Moody’s C and SP C – income bonds with no interest being paid Moody’s D and SP D – in default with principal and interest in arrears 6-* WSJ May 12, 2010 The Senate approved a provision that would thrust the government into the process of determining who rates complex bond deals, in a move to end alleged conflicts of interest blamed by some for worsening the financial crisis. The 64-35 vote Thursday represents one of the strongest moves yet by Congress to change how business is done on Wall Street. The amendment aims to resolve whats considered one of the thorniest problems in financial markets: Bond issuers choose ratings agencies and pay for ratings, meaning raters revenues depend on the very firms whose bonds they are asked to judge. Under the new provision, the Securities and Exchange Commission would instead establish and oversee a powerful credit-rating board that would act as a middleman between issuers seeking ratings and the rating agencies. The board would select which agency provides th