Management and Organizational Studies 2310A/B Study Guide - Midterm Guide: Corporate Bond, National Post, Yield Curve

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Nicholas Kahnert

Document Summary

Chapter 7 interest rates and bond valuation. When a corporation or the government wishes to borrow money from the public on a long-term basis. Interest-only loan (the borrower pays the interest every period) None of the principal is repaid until the end of the loan. Bond coupons: the regular interest payments made: bonds that receive the same interest payments each year are called level coupon bonds. Face value / par value: the amount repaid at the end of the bond: government bonds typically have a larger face value. Coupon rate: the annual coupon divided by the face value: this is the % of interest you are paying. Maturity: specified date at which the principal amount of a bond is paid: this varies but corporate bonds are typically 30 years. Cash flows from a bond remain constant since the coupon rate and maturity date are fixed.