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Canada (161,798)
Commerce (596)
COMM 121 (16)
Chapter 6

Chapter 6

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COMM 121
Blair Robertson

Chapter 6: How to Value Stocks and Bonds Definition and Example of a Bond  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 $1,000 each, each carrying a coupon rate of 5% and a maturity of two years, interest is paid yearly How to Value Bonds Pure Discount Bonds  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) o This type of bond is aka a zero-coupon bond for this reason  PV = Level-Coupon Bonds  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  PV= [ ] A Note on Bond Price Quotes  Standard c
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