Example of discount bond
What is Discount Bond? Pros & Cons | Fincash.com
Discount bond – a bond that sells for less than its par value. This is the case when the YTM is greater than the coupon rate. Example: Suppose the YTM on bonds similar to that of Wilhite Co. (see the previous example…
[DOC File]Chapters 10&11 - Debt Securities
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A bond selling at a discount is one that originally was selling for, say $1,000, but now is selling for $950 because interest rates have risen since the bond was first issued. Using a numerical example to illustrate, you issue a $1,000 face value 10-year bond…
[DOC File]FIRST PRINCIPLES OF VALUATION
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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 year Maturity date. Call provision: the issuer …
[DOC File]Bond Pricing
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Example: A $1000, 10-year bond with a 9% coupon rate, will sell at $1000 when similar bonds are yielding 9%. Discount: Bonds sell at a discount to face value when similar bonds have higher yields. Example: The bond in the example …
[DOCX File]Things to have – websites/slides
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So, if you own a bond that promises a particular nominal stream of future principal and interest payments [,, … , ], a rise in interest rates will cause the price of your bond, V, to fall; and a fall in interest rates will cause the price of your bond to rise. Example…
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