COM 240 Chapter Notes - Chapter 7: Nominal Yield, Chattel Mortgage, Interest Rate Risk

• School: University of Victoria
• Department: Commerce
• Course: COM 240
• Professor: Majerbi Basma

Document Summary

Com 240 - chapter 7: interest rate & bond valuation: bonds: debit securities that are issued or sold by a company in order to borrow $ from the public on a long-term basis. Normally an interest-only loan (ex. a company borrows for 30 years, at 12%: coupon: the stated interest payment made on a bond (ex. x 0. 12 = the company will pay the bond"s coupon of. F = face value paid at maturity t = number of periods until maturity calculated assuming that all promised payments will be made: discount bond: a bond that sells for less than face value. Market interest rates goes up, the bond sells for less: premium bond: a bond that sells for more than face value. Market interest rates goes down, the bond sells for more interest rate risk: the risk hat arises for bond owners from uctuating interest rates (market yields) Not an ownership interest in the rm.