COMM 121 Chapter Notes - Chapter 6: Accrued Interest, Dirty Price, Clean Price
27 Sep 2013
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Chapter 6: how to value stocks and bonds. A bond is a certificate showing that a borrower owes a specifies sum and has a agreed to make interest and principle payments on designated dates. Example: issue 100,000 bonds for ,000 each, each carrying a coupon rate of 5% and a maturity of two years, interest is paid yearly. This type of bond promises to pay a single payment at a fixed future date. The bond holder receives no money until the maturity date (no coupons: this type of bond is aka a zero-coupon bond for this reason. Coupons are the stated interest on debt instruments. The holder is paid a fixed amount of money (coupon) at stated intervals and is paid back the face value at the maturity of the bond. Bond price = coupon + look at comm 111 notes. This is the return an investor would receive from his/her entire investment: ytm coupon rate.
