财务管理-台湾大学课件lecture4.ppt

Topics Covered Bond Characteristics reading the financial pages Bond Prices and Yields Bond prices and interest rates YTM vs. current yield Rate of Return Interest Rate Risk The Yield Curve Nominal and Real Rates of Interest Default Risk Bonds Terminology Bond - Security that obligates the issuer to make specified payments to the bondholder. Coupon - The interest payments made to the bondholder. Face Value (Par Value or Maturity Value) - Payment at the maturity of the bond. Coupon Rate - Annual interest payment, as a percentage of face value. Bonds WARNING The coupon rate IS NOT the discount rate used in the Present Value calculations. The coupon rate merely tells us what cash flow the bond will produce. Since the coupon rate is listed as a %, this misconception is quite common. Bond Pricing The price of a bond is the Present Value of all cash flows generated by the bond (i.e. coupons and face value) discounted at the required rate of return. Bond Pricing Example What is the price of a 6 % annual coupon bond, with a $1,000 face value, which matures in 3 years? Assume a required return of 5.6%. Bond Pricing Example (continued) What is the price of the bond if the required rate of return is 6 %? Bond Pricing Example (continued) What is the price of the bond if the required rate of return is 15 %? Bond Pricing Example (continued) What is the price of the bond if the required rate of return is 5.6% AND the coupons are paid semi-annually? Bond Pricing Example (continued) Q: How did the calculation change, given semi-annual coupons versus annual coupon payments? Bond Yields Current Yield - Annual coupon payments divided by bond price. Yield To Maturity - Interest rate for which the present value of the bond’s payments equal the price. Bond Yields Calculating Yield to Maturity (YTM=r) If you are given the price of a bond (PV) and the coupon rate, the yield to maturity can be found by solving for r. Bond Yields Example What is the YTM of a 6 % annual coupo