RSM332H1 Chapter Notes - Chapter 6: Yield Spread, Liquidity Preference, Corporate Bond
Document Summary
In the broadest sense, a bond is any debt instrument that promises a fixed income stream to the holder. A fixed face or par value, paid to the holder at maturity. A fixed coupon, which specifies the interest payable over the life of the bond. Fixed income securities are often classified according to maturity: Bills or paper have maturities less than one year. Notes have maturities between one and seven years. Bonds may be either bearer bonds or registered bonds. The market price of a bond is the present value of the payments promised by the bond. The bond indenture is the contract between issuer and holder, which specifies: Par value or face value (usually in increments of ,000) Bond pricing, usually shown as the price per of par value which is equal to a percentage of the (cid:271)o(cid:374)d"s fa(cid:272)e (cid:448)alue. Term to maturity is the time remaining to the maturity date.
