Callable Bond PowerPoint PPT Presentations

A callable bond is a bond in which the issuer has the right to call the bond at specified times from the investor for a specified price. At each callable date prior to the bond maturity, the issuer may recall the bond from its investor by returning the investor’s money. The underlying bonds can be fixed rate bonds or floating rate bonds. A callable bond can therefore be considered a vanilla underlying bond with an embedded Bermudan style option. Callable bonds protect issuers. Therefore, a callable bond normally pays the investor a higher coupon than a non-callable bond. This presentation gives an overview of callable bond and valuation model. You can find more presentations at http://www.finpricing.com/productList.html.

Chapter 5 Bonds, Bond Valuation, and Interest Rates * * Bond Spreads, the DRP, and the LP A bond spread is often calculated as the difference between a ...

Business cycle expansion, investment opportunities , Bs , Bs shifts out to right ... In a business cycle expansion, the supply of bonds increases ...

Bonds and Bond Valuation * 6.4 Bond Ratings * 6.5 Some Bond History and More Bond Features Corporate bond features have gone through some major changes over the years.

Corporate Bonds Government Bonds

Consider a bond with a coupon rate of 10% and coupons paid annually. The par value is $1000 and the bond has 5 years to maturity. ... Convertible bonds. Put bond ...

Both methods amortize the same total amount of discount over the life of the bonds. ... The firm uses straight-line amortization. ...

Both methods amortize the same total amount of discount over the life of the bonds. ... The firm uses straight-line amortization. ...

Both methods amortize the same total amount of discount over the life of the bonds. ... The firm uses straight-line amortization. ...

Chapter 6. Bonds and Bond Pricing. Real Assets versus ... Features Table 6.1, ... Amortization schedule (Table 6.2) shows implied interest payments each ...

Some of the action has been automated, so click the mouse when you ... Bonds issued on the basis of the general credit of the corporations are debenture bonds. ...

Financing Corporations ... Let's look at estimated income statements based on three alternative financing plans: ... 25% financing from issuing 9% preferred ...

credit card debt, auto loans, home equity loans, equipment leases ... Buying and selling short-term debt securities; quick cash conversion ...

Bonds. The Stock Market Game TM. Bonds in General ... Bonds like mutual funds trade real time (no cancellations) Coupon payments are posted when due ...

... Future Expected Cash Flows discounted by the. Required Rate of ... The cash flows are discounted (present value determined) using the market rate of interest. ...

Principal, Face Value, Maturity Value, and Par Value: The amount of money the ... Example: Consider a $1,000 face value bond that pays annual interest and has a ...

A puttable bond is a bond in which the investor has the right to sell the bond back to the issuer at specified times for a specified price. At each puttable date prior to the bond maturity, the investor may get the investment money back by selling the bond back to the issuer. The underlying bonds can be fixed rate bonds or floating rate bonds. A puttable bond can therefore be considered a vanilla underlying bond with an embedded Bermudan style option. Puttable bonds protect investors. Therefore, a puttable bond normally pays investors a lower coupon than a non-callable bond. This presentation gives an overview of puttable bond and valuation model. You can find more presentations at http://www.finpricing.com/productList.html.

Bond Portfolio Management Term Structure Yield Curve Expected return versus forward rate Term structure theories Managing bond portfolios Duration Convexity

Chapter 05 Bonds & Valuation * Hypothetical Treasury Yield Curve Bankruptcy Bankruptcy alternatives:: Reorganization Liquidation Typically, a company wants ...

Term structure theories. Managing bond portfolios. Duration. Convexity ... Information on expected future short term rates can be implied from yield curve. ...

Most Euro zone government bonds have annual coupons and Actual/Actual year fraction ... capital gain (for bonds trading in discount) or capital loss (for bonds trading ...

Designing a portfolio so that its performance will match the performance of some bond index ... Salomon Smith Barney (SSB) Broad Investment-grade Bond Index (BIG) ...

Basel regulation based on unregulated privately contracted ratings ... CAR and procyclicality (also: from levels of risk-weighted assets to their rates ...

a Gospel Perspective Investments 6: Bond Basics Objectives A. Understand risk and return for bonds B. Understand bond terminology C. Understand the major types of ...

Unemployment increases. Decreased in the number of building permits ... One way to apply multiple discriminant analysis is to compute and then rank the ...

Bonds A bond is a long-term debt instrument in which a borrower agrees to make payments of principal and interest, on specific dates, to the holders of the bond.

No specific assets are pledged as security. ... Convertible bonds - retired as a consequence of bondholders choosing to convert ...

Title: PowerPoint Presentation Author: Cheri Etling Last modified by: Windows User Created Date: 9/4/2000 12:15:41 AM Document presentation format

Our choice of k1 and k2 reflect our reinvestment rate assumption. 22. Example ... It requires you to know in advance the reinvestment rate(s) for. your coupons ...

Convertible provision. conversion ratio. market conversion value. conversion premium ... Convertible example. conversion ratio = 25. market price of stock = $42 ...

Bond and Stock Valuations 1. Definition and Example of a Bond 2. How to Value Bonds 3. Bond Concepts 4. The Present Value of Common Stocks 5. Estimates of Parameters ...

Debentures. Bonds backed by the credit of the issuing company. Mortgage-backed bonds ... Debenture. Long-term unsecured bond. Can have a hierarchy of payment, ...

Explanations of the shape of the yield curve and why it changes shape over time. 8 ... View bonds as source of capital gains arising from changes in interest rates ...

Bond Prices and Yields * * * * * * * Risk structure of interest rates Greater default risk, higher default premium Default premiums Yields compared to ratings Yield ...

Typically a bond is a security in which the issuer (borrower) promises to repay ... The $80 payment typically conies in two semiannual installments of $40 each. ...

Bonds Chapter 13 from Financial Accounting Bonds A form of interest bearing note Requires periodic interest payments The face amount must be repaid at the maturity ...

Types of bonds by credit rating. Bonds come in many variations. Issuer. Government. Provincial ... Changes in credit rating (default risk). The Dynamics of Bond Prices ...

Yield is the rate of return earned by an investor who holds a bond for a ... Bonds may be debentures, mortgage bonds, subordinated bonds or convertible bonds ...

1) everything else being the same, which of them has the lowest price? Fin330 Chap9 ... If the call price is less than the present value of the scheduled payments, the ...

The face amount must be repaid at the maturity date. Bondholders are creditors of the issuing corporation ... Debenture bonds. Present Value & Bonds ...

... interest rate for calculating interest payments = annual coupon/face value ... Debt secured by a mortgage on real assets (property, but not cash or ...

Combination of bonds and equities bond plus conversion option ... plus a put option. ? The put option represents the bond floor protection. ...

Investing in Bonds and Other Investments Why Consider Bonds? ? Bonds reduce risk through diversification. ...

Corporate Bonds (cont'd) Unsecured corporate debts are not secured by ... Corporate Bond Quotes in The Wall Street Journal. Bonds the name of the issuer ...

They promise either a fixed-stream of income or a stream of income that is ... If dividends are not paid they cumulate. They have priority over common stock holders. ...

Investing in Stocks and Bonds Objectives Objectives Objectives Stocks and Bonds and How They are Used Why do corporations issue common stock? To raise money to start ...

... the reference rate, and (2) any restrictions on the resetting of the coupon rate. ... 90-day bank bill rate 2.00% margin reset quarterly in advance. ...

... maturities greater than one year so bonds are instruments of the capital markets ... investors because interest (but not capital gains) are tax exempt ...

Duration is shorter than maturity for all bonds except zero coupon bonds ... Equal duration assets are equally sensitive to changes in interest rates ...

Bond Valuation

New car dealer comparison. Comparison to equity markets. 6. Important Issues ... 5 and -7 bps versus two comparison samples, both statistically significant. ...

CHAPTER 11: BOND YIELDS AND PRICES. Chapter Summary ... Fitch IBCA. Canadian Bond Rating Service (CBRS) Rating Categories. Investment grade (BBB or above) ...

Solving Bond Problems with a Financial Calculator ... To ensure that the corporation can refinance their bonds should they wish to do ...

Payable annually, semiannually, or quarterly. Coupon rate stated in the bond. Price of bond ... Paid semiannually so each payment is $11,000. $11,000 X PVA( r ...

Normally, if a bond is called, the bondholder is paid a premium over the face ... of $964.54. The bond is callable in one year at a premium of 3% over the face value. ...

Lessors get better treatment in bankruptcy proceedings than lenders. 56 ... cash) and lease the same asset back used to free up cash invested in real estate ...