Financial Institutions and Markets Jim Wilcox Bond Yields‚ Returns‚ Risks‚ and Duration • • • • • Bonds and Loans Yields and Returns Price Volatility and Risk in Default-Free Bonds Measuring Interest Rate Risk Duration: Types‚ Calculation‚ Meaning‚ Uses • Next Time: Chapter 11 re: Duration Week # 2 January 28‚ 2014 1 Coming Soon! What We Did 1. 2. 3. 4. Week # 2 January 28‚ 2014 2 Yield to Maturity (YTM): A Result‚ Not a Cause! • YTM = percentage rate
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Yield to Maturity Kindra Hill University of Phoenix MMPBL/503 Wk 5 June 27‚ 2010 Scenario: A coworker of yours was discussing her investments with a broker. Your coworker was confused because she had purchased a 10% bond but the broker kept repeating that it had a 9% yield to maturity. Explain the concept of yield to maturity. This paper will explain the concept of yield to maturity in reference to bonds. It will allow for understanding of the difference in the stated rate of
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |a. What is the bond’s yield to maturity? | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |Basic Input Data: | | | | | | | | | | | | | | | | |Years to maturity: |10 | | | | | | | | | | | | | | | |Periods per year: |2 | | | | | | | | | | | | | | | |Periods to maturity: |20 | | | | | | | | | | | | | | | |Coupon rate: |12% | | | | | | | | | | | | | | | |Par value: | |$1‚000 | | | | | | |
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"disposable life" of software. Our assumptions may‚ or may not‚ be valid. Our assumptions are as follows: The technology industry is in a state of flux with the duration of the above listed items completely mismatched within companies. The mismatched time horizons are causing more volatile stocks‚ stemming in part from‚ less stable financial performance for software companies. We believe that faster development cycles and Internet-based distribution channels have accelerated parts of the business‚ while
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UGBA 103 Fixed Income Valuation 1A) YTM is 4.75% at time of issuance. YTM is 4.88% at 99 per 100. YTM is 4.62% at 101 per 100. 1B) NTT should have been selling at $915.861M PVpredrop = (47.5/.0475)*(1-(1/((1.0475)^2))) = 88.636M PVpostdrop = ((30/.03)*(1-(1/((1.03)^2))))/(1.03^2) = 198.502M PVfacevalue = 1B/(1.0475)^10 = 628.723M PVpredrop + PVpostdrop + PVfacevalue = 915.861M 2A) Bond A should sell at $1040.55 each. Bond B should sell at $1000 each. Bond C should sell
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Yield of CuCl2.2DMSO Formula weight (Mr) of CuCl2 = 63.55 + (35.45 x 2) =134.45g/mol Formula weight of product CuCl2.2DMSO = 134.45 + 2[16 + 32.06 + (12.01 x 2) + (1.0079 x 6)] = 290.704g/mol Mass of CuCl2= 0.850g Equation for reaction CuCl2 + 2DMSO -> CuCl22DMSO Mole ratio between CuCl2 and CuCl22DMSO = 1:1 Mole of CuCl2 = Mass/ Mr = 0.850/134.45 = 0.00632 moles Since the ratio between CuCl2 and CuCl22DMSO = 1:1‚ mole of CuCl2DMSO is also 0.0063 moles. To find theoretical yield of CuCl2
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Maturity Looking at the word maturity from society’s perspective‚ what it means is to become an adult‚ to be a man or a woman instead of a boy or a girl‚ or to simply be old enough to attend the screening of an R-rated movie. But the actual meaning of being mature goes beyond turning 18 years old. Becoming Mature means gaining the ability to manage your self‚ knowing how to handle certain situations and thinking of the consequences of your actions. My mother always told me‚ maturity is defined
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something different. If one were to look it up in the nearest dictionary‚ they would find that it is defined as “full development”. Full development of what‚ one may ask? This leads to different types of maturity branching out; physical‚ emotional and social‚ each with its own definition. Physical maturity is perhaps the most obvious type. At a certain stage in every person’s life‚ they will suddenly experience sudden changes that lead to them blossoming into an adult body. For girls‚ to their dismay
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Chapter 10 Bond Prices and Yields 1. a. Catastrophe bond: Typically issued by an insurance company. They are similar to an insurance policy in that the investor receives coupons and par value‚ but takes a loss in part or all of the principal if a major insurance claim is filed against the issuer. This is provided in exchange for higher than normal coupons. b. Eurobond: They are bonds issued in the currency of one country but sold in other national markets. c. Zero-coupon bond: Zero-coupon bonds
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variety of factors that impact the shape of the yield curve but monetary authorities influence greatly the shape of the yield curve .Monetary authorities influence the shape of the yield curve by initiating either a contractionary monetary policy or an expansionary monetary policy.A yield curve is a line that plots the interest rates‚ at a set point in time‚ of bonds having equal credit quality‚ but differing maturity dates. The most frequently reported yield curve compares the three-month‚ two-year‚ five-year
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