BMGT 340 Chapter Notes - Chapter 6: United States Treasury Security, Notional Amount, Yield Curve
15 Nov 2016
School
Department
Course
Professor
Document Summary
Bond: security sold by governments and corporations to raise money from investors today in exchange for a promised future payment. Bond certificate: indicates all amounts and dates of all payments to be made. Maturity date final bond repayment date. Term time remaining until the maturity date. Face value = par value = principal amount = notional amount of a bond used to compute its interest payments. Promised interest payments of a bond, paid periodically until the maturity date of the bond. Coupon payments are determined by a coupon rate. Also called spot interest rates: yield curve is lower yield short term and higher yield long term which kind of slopes upward gradually. Coupon bonds: pay face value at maturity, treasury notes maturity between 1-10 years, treasury bonds mature after 10 years, return on a coupon bond. Any difference between purchase price and principal. Periodic coupon payments: we can convert any price into a yield and vice versa.
