ADMS 3530 Lecture Notes - Current Yield, Convertible Bond, Constitutional Basis Of Taxation In Australia

• School: York University
• Department: Administrative Studies
• Course: ADMS 3530
• Professor: all

Document Summary

Usually bonds are paid interest semi-annually: a bond"s yield represents the return you get on the bond. There are two types: current yield and yield of to maturity: basis point: 100 basis points = 1% therefore 25 bases points = 0. 25% Coupon is slightly lower because of their privilege. Callable bond: allows the issuer of the bond to pay back bondholders prior to the maturity date. Coupon rate is generally a bit higher for this reason because it benefits bond issuers and not investors. If interest rates fall, the company can borrow by issuing new bonds with a lower coupon rate. Calling, previously issued bonds means the company must have lots of cash on hand though: csr"s: immediately redeemable (highly liquid), backed by government"s (safe), and taxation power. Extendible bond: issuer may choose to extend the maturity date of the band.