ECON 106F Lecture Notes - Lecture 6: Credit Risk, High-Yield Debt, Yield Curve
Document Summary
Identify the cash flows for both coupon bonds and zero-coupon bonds, and. Calculate the yield to maturity for both coupon and zero-coupon bonds, and. 1. calculate the value for each type of bond. 3. rates remain the same over the life of the bond. Given coupon rate and yield to maturity (ytm), assuming prevailing interest. Determine whether a coupon bond will sell at a premium or a discount. Describe the time path the bond"s price will follow as it approaches maturity. Discuss the effect of coupon rate to the sensitivity of a bond price to changes in. Calculate the price of a coupon bond using the law of one price and a series of. Define duration, and discuss its use by finance practitioners. Illustrate the change in bond price that will occur as a result of changes in. 4. interest rates; differentiate between the effect of such a change on long-term versus short- term bonds.
