Ch 7 Valuation and Characteristics BONDS of c 2002. Prentice Hall. Inc
Ch. 7: Valuation and Characteristics of © 2002, Prentice Hall, Inc
Characteristics of Bonds o Bonds pay fixed coupon(interest) payments at fixed intervals(usually every 6 months)and pay the par value at maturity
Characteristics of Bonds •Bonds pay fixed coupon (interest) payments at fixed intervals (usually every 6 months) and pay the par value at maturity
Characteristics of Bonds o Bonds pay fixed coupon(interest) payments at fixed intervals(usually every 6 months)and pay the par value at maturity. SISISISISI SHSM 0
Characteristics of Bonds •Bonds pay fixed coupon (interest) payments at fixed intervals (usually every 6 months) and pay the par value at maturity. 0 1 2 . . . n $I $I $I $I $I $I+$M
example: ATT6/2 29 par value=$1000 coupon=6.5% of par value per year. S65 per year($32.50 every 6 months). maturity=28 years(matures in 2029). issued by at&t
example: ATT 6 1 /2 29 • par value = $1000 • coupon = 6.5% of par value per year. = $65 per year ($32.50 every 6 months). • maturity = 28 years (matures in 2029). • issued by AT&T
example: ATT6/2 29 par value=$1000 coupon=6.5% of par value per year. S65 per year($32.50 every 6 months). maturity=28 years(matures in 2029). issued by at&t. s32.50S32.50S32.50S3250S32.50S3250+$1000 0 2 28
example: ATT 6 1 /2 29 • par value = $1000 • coupon = 6.5% of par value per year. = $65 per year ($32.50 every 6 months). • maturity = 28 years (matures in 2029). • issued by AT&T. 0 1 2 … 28 $32.50 $32.50 $32.50 $32.50 $32.50 $32.50+$1000