Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Illustration
Discount bond (5 yr. bond with 10% coupon) (expected rate yield at 12%)
Premium bond (expected yield at 7.8%)
5
92.6
109.0
4
93.8
107.4
3
95.1
105.8
2
96.5
104.0
1
98.2
102.0
0
100.0
Reasons for price changes of a bond:
Change in the yield requirement of the issuer due to changes in the quality of credit of the issuer.
Change in the price as the bond approaches maturity in case of premium or discount bond.
Change in the price because of change in the yields of comparable bonds/securities.
While computing the bond pricing, the following assumptions are made:
Cash flows are known.
Coupon payment annually/semi-annually is made at exact period.
Required yield can be estimated.
One rate is used to discount all cash flows, i.e., with required yield rate.
The following cash factors are to be considered:
For callable bonds, cash flows cannot be certain. The investment decisions of the issuer depend on interest rate movements and other factors.
It is not possible to determine the appropriate yields and it need not be a single rate for all the future cash flows.
Q. Explain Discounting or Present Value Concept? Discounting or Present Value Concept: - According to this concept rupee one of today is more valuable than rupee one a year lat
Ashok is to receive an amount of Rs. 15,00,000 from his relative after 3 years. He wants to buy a house for which he wants the money to be paid now. His relative had already invest
Considering the following information, what is the price of the share as per Gordon’s Model? Details of the Company Net sales Rs.120 lakhs Net profit margin 12.5% Outstandin
What are the Drawbacks of benchmarking - Benchmarking systems and programmes can be costly and time consuming - Diversity and complexity of information can 'overload 'mana
Dividend Decision: The Dividend Decision is a decision taken by the directors of a company. It relates to the timing of any cash payments and amount made to the company's stoc
How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit.
A.I.G. is often called the largest insurance entity in the world. A.I.G.'s total assets were $860 billion on 12/31/2008 (dwarfing any other insurance entity) with 116,000 employees
Define intermediation . The monetary system makes it possible for deficit and surplus economic units to come together exchanging funds for securities to their mutual benefit.
Return Enhancement can be explained using following heads: Use of a Valuation Model: An investor having access to a bond valuation model can bu
Beta Value Risk is an important consideration while investing in any security. It is the possibility that realised returns will be less than the returns expected. The degree, t
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd