Coupon rate vs discount rate

    • [DOC File]FIRST PRINCIPLES OF VALUATION

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      Opportunity cost is simply the best alternative financial opportunity that exists, at the same risk level as the one under consideration. In the auto example, it is the 12% certain, that he can earn on the loan. Therefore, the appropriate discount rate is 12%. PV = $70,000/(1+0.12) = $62,500 vs. the $60,000 that he must pay for the car today.

      coupon rate vs market rate

    • [DOC File]RISK-ADJUSTED DISCOUNT RATE

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      zero coupon bonds, consols. coupon bonds, coupon rate, balloon payment. mortgages, self-amortizing loans. constant principal payment loans. callable, convertible, sinking fund, serial bonds. tax-advantaged bonds, municipal bonds. risk-adjusted discount rate. stock price indices. investment strategies. price-earnings multiple. cash flow per share

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    • [DOC File]8-2

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      Apr 17, 2010 · The discounted payback, using a 4% discount rate, is 30 years. This shows that unless the acceptable payback period is decreased when discounted payback is used, vs. regular payback, then projects which return money late in the life of the investment are even more disadvantaged under discounted payback than under regular payback.

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    • [DOC File]Godgift

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      F 4. Market rate vs. coupon rate. F 5. Definition of stated interest rate. T 6. Stated rate and coupon rate. F 7. Amortization of premium and discount. F 8. Issuance of bonds. F 9. Interest paid vs. interest expense. T 10. Accounting for bond issue costs. T 11. Refunding of bond issue. F 12. Long-term notes payable. T 13. Implicit interest rate ...

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    • [DOC File]Chapters 10&11 - Debt Securities

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      (coupon payments) over a specific time period and repays a fixed amount of principal (par or face value) at maturity. Face value or par value: usually $1,000. Coupon rate and interest payment. Zero-coupon bond: coupon rate is zero, no coupon payment, sells at a discount. For example: a 10 year zero-coupon bond sells at $550 and yields 6.16% per ...

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    • [DOC File]Term Structure

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      Coupon vs. Pure Discount: Coupon 10%. Maturity 10 years. Initial Price $100. Annual Payments. Interest Rate 10% II. MACAULAY/FISHER AND WEIL [D2] ASSUME % CHANGE. IN PRICE = [ MINUS DURATION ] X[ % CHANGE IN ( 1 + r01 )] EXAMPLE 3. Coupon 10% (semi-annual) Principal $100

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    • [DOC File]Introduction to Interest Rate Risk

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      Discount bond - lower cash flows sooner in lower coupon payments - greater cash flows at a later date. How to Calculate Duration: The Spreadsheet Method The following example is used to calculate the duration of a 5-year $1000 bond, with a 6% coupon rate (with interest payments made annually (Not semiannually - as is the usual case).

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    • [DOC File]Professor Paul Zarowin - NYU Stern School of Business

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      When bonds are issued, if their coupon rate (annual cash interest par value of bond) does not equal their effective market rate, the bond will sell at a premium (above par, if coupon rate > effective market rate) or discount (below par, if coupon rate < effective market rate). The discount or premium is amortized over the life of the bond.

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    • [DOC File]Chapters 1&2 - Investments, Investment Markets, and ...

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      Coupon rate and interest payment . Maturity date . Call provision . Call premium and call price . Face value . Zero coupon bonds . Required rate of return – discount rate, i/y. 2. Interest rate risk: price risk vs. reinvestment risk. Interest rate price risk: risk that the bond price will fall if interest rates rise

      coupon rate vs market rate

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