Bonds, Financial Management

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Explain what a bond is and discuss its nature as a "fi xed income" security.Discuss important terms in relation to bonds as the "price", "maturity", "current yield", "yield to maturity", "par", "premium" and "discount", "present value" and "face value", ...

Describe yield curves in relation to bonds and explain the so-called 'expectations theory'. Explain ratings and default risks for bonds. Explain how to include the probability of default in the pricing of bonds.

Look in the Financial Times, Wall Street Journal or some other major nancial newspaper for bonds and study their quotation style. Pick examples and relate as much as possible to what you have learned making use of the mathematical techniques introduced in the lectures.


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