Interest Rates, Bonds and Bond Pricing
About the Lecture
The lecture Interest Rates, Bonds and Bond Pricing by Edu Pristine is from the course Archiv - Financial Markets and Products. It contains the following chapters:
- Types of Interest Rates
- Calculation
- Introduction - Bonds
- Bond pricing
- Different Yields
Author of lecture Interest Rates, Bonds and Bond Pricing
Edu Pristine
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Excerpts from the accompanying material
... Treasury bills are short term while Treasury bonds are longer term (> 1 year), Corporate bond rates: These are rates on long term bonds issued by a corporate, LIBOR: This is the London Interbank Offer Rate (LIBOR) and the rate at which banks make a large wholesale deposit or loan with/to another bank ...
... Amount compounded annually would be given by: -A = P (1+ r)t, A = terminal amount, P = principal amount, r= annual rate of interest, t = number of years for which the principal is invested ...
... the interest rate r equired for $1 to rise up to $1.10517 would have been 1.10517 ...
... Periodic compounding interest rate with ‘m’ periods per year: R c= m.ln(1+ R m/m) ...
... Example: A company ABC issues bonds of worth $100. An investor ‘X’ buys the bond by paying $100 to the company ...
... is the coupon rate at which the present value of t he cash flows equal to the par value (principal value) of the bond. If we are looking at a semi-annual 5 year coupon bond with a par value of $100 then the coupon payment would be solved using the following equation: ...
... An extendible bond gives its holder the right to "extend" its initial maturity at a specific date or dates ...
... in First Part of this presentation. 1. Below topics have been ...
... and Risk Models Spot, forward and Par Rates ...
... in Treasury bills and Treasury bonds. Treasury bills are short term while Treasury bonds are longer term (> 1 year). Corporate bond rates: These are rates on long term bonds issued by a corporate. LIBOR: This is the London Interbank Offer Rate (LIBOR) and the rate at which banks make a large wholesale deposit or loan with/to another bank ...
... of 10.25% annual rate Amount compounded annually would be given by: A = P(1+r)t – A terminal amount – P principal amount – r annual rate of interest – t number of years for which the principal is invested. If amount compounded n times ...
... Question: If the interest rate is 10% ...
... the interest rate r equired for $1 to rise up to $1.10517 would have been 1.10517 ...
... Question: If the interest rate is 10% ...
... Rm = Periodic compounding interest rate with ‘m’ perio ds per year. Rc = m*ln(1+ R m/m) ...
... the government to raise funds Example: A company ABC issues bonds of worth $100. An investor ‘X’ buys the bond by paying $100 to the company ABC. ...
... The par yield is the coupon rate at which the present value of t he cash flows equal to the par value (principal value) of the bond If we are looking at a semi-annual 5 year coupon bond with a par value of $100 then the coupon payment would be solved using the following equation: ...
... Extendible feature. Reduce required YTM. An extendible bond gives its holder the right to "extend" its initial maturity at a specific date or dates. Retractable feature. Reduce required YTM. ...
... at their par (face amount) at mat urity. The purchase price is expressed as a price per hund red dollars. Bills are sold at a discount. The discount rate is determined at auction. Bills pay interest only at maturity. The interest is equal to the face value minus ...
... of rising interest rates, while the seller hedges against the risk of falling interest rates Payment to the long at settlement = Notional Principal X (Rate at settlement – FRA Rate) (days/360)...
... settles in 30 days. Has $1mn notional. Is based on 90-day ...
